Segment 2 Of 2 Previous Hearing Segment(1)
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AGENCY BUDGETS AND PRIORITIES FOR FISCAL YEAR 2001
Wednesday, February 9, 2000
House of Representatives, Subcommittee on Water Resources and Environment, Committee on Transportation and Infrastructure, Washington, D.C.
The subcommittee met, pursuant to notice, at 1:03 p.m., in room 2167, Rayburn House Office Building, Hon. Sherwood L. Boehlert, chairman of the subcommittee, presiding.
Mr. BOEHLERT. The Water Resources and Environment Subcommittee meets today to receive testimony on agency budgets and priorities for fiscal year 2001. We will hear from agencies under our subcommittee's jurisdiction, and members will have the opportunity to examine the Administration's fiscal and program priorities.
I want to welcome all of our witnesses. Secretary Westphal, we appreciate your presence here today. I think we share common goals: maximizing the resources and opportunities available to the Corps of Engineers to carry out its authorized mission and early enactment of a Water Resources Development Act for 2000. The proposed Corps budget for fiscal year 2001 looks a lot like expected spending levels for this year, which is generally good news when compared to previous budget requests. However, we must be concerned that holding steady on spending for our water resources development may not be sufficient in the long term to keep our ports and inland waterways competitive. Also, it may not be sufficient to fulfill the other missions of the Corps related to flood protection and environmental restoration.
With respect to WRDA 2000, we expect spirited debate over harbor financing proposals and restoration of the Everglades as the year unfolds. I look forward to working with Dr. Westphal and General Ballard to enact this important legislation.
Let me also welcome my friends from the Environmental Protection Agency, Assistant Administrators Chuck Fox and Tim Fields. This subcommittee, I must confess at the outset—and I said I would be diplomatic—is extremely disappointed over the Administration's budget request for Clean Water State Revolving Funds. Once again, despite strong bipartisan requests to provide leadership on clean water infrastructure, the Administration has proposed a $550 million cut, a $550 million cut in the popular State revolving funds. This peculiar inside-the-beltway dance on shortchanging the Clean Water Act I think, is irresponsible and indefensible. EPA and other government organizations have estimated clean water infrastructure needs will be more than $300 billion over the next 20 years. This funding gap is expected to increase, particularly if we don't increase Federal assistance and encourage innovative financing.
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You can expect continued bipartisan resistance to deep cuts in clean water programs. You can also expect continued efforts by the subcommittee to bolster clean water infrastructure programs, and to improve programs regarding wetlands, beach and water quality, estuaries, clean lakes and watersheds, and control of non-point source pollution and other wet weather flows.
Bipartisan Superfund reform and brownfields revitalization continue to be high priorities. I hope the Administration will recognize the broad support behind H.R. 1300, which was reported out of this committee by a vote of 69–2. The two that didn't vote with the majority, one was reading from last year's script or the previous year's script, and the other one was upset because he wasn't recognized by the Chair. But 69–2 is a strong expression of support. We want to work with you to advance meaningful, reasonable reforms to this very important program.
Let me also welcome our witnesses from the Tennessee Valley Authority, the Natural Resources Conservation Service, and the National Oceanic and Atmospheric Administration. I anticipate continued review of TVA's power and non-power programs. NRCS's small watershed program, particularly the increasing problem of aging infrastructure, should also receive considerable attention by Congress. In addition, NOAA has a significant role to play in various ocean and coastal programs, and I look forward to working with the agency, particularly on the challenge of coastal non-point source pollution and water quality.
Let me now turn to my colleagues for any opening statements they would like to make. Mr. Blumenauer?
Mr. BLUMENAUER. Thank you, Mr. Chairman.
I appreciate your sensitivity to the fact that the water cycle profoundly affects the quality of life in this country and appreciate your having this hearing today.
It is very important that the Federal Government lead by example in environmental issues, and there is no place where we have more opportunity to affect the quality of life, for good or ill, than in the budgets we will be reviewing today.
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You have indicated we are looking forward to setting the stage for WRDA. I know you have high expectations for reform legislation and the potential for hearings on coordination and oversight as the year progresses.
We are seeing some real progress from the Federal agencies who are taking that huge battleship and shifting its direction as people are looking at their missions differently, as employees up and down the chain of command, I think, are looking more broadly in terms of their view of environmental protection and how to do their jobs.
I don't think we are there yet. I don't think the people that are here would suggest that we are finished, but I do think that there are important changes that I have seen in terms of the approach from many of these critical agencies.
I look forward to hearing from them today in terms of how they see this budget proposal, and the work that Congress will do in the course of the year that will help them make the adjustments in the missions, where necessary, give them the flexibility to do what is right, in some cases hopefully working to make sure that Congress does not undercut their efforts, which occasionally happens, I am afraid, in some of the water resource areas, where things that I know you are concerned about, Mr. Chairman, sometimes don't exactly make their way through the process.
But I think the hearing today is going to be an important step forward to our having a very productive year under your leadership. I don't think we will be subjected on this committee to the sort of paralysis that some are predicting as far as other committees' congressional activity is concerned.
Mr. BOEHLERT. Thank you very much, and let me echo your basic theme that we have high expectations on this subcommittee, and it is our intention to deliver the best possible product on a bipartisan basis and to work closely with the people before us and the rest of the people that are serving within the Administration.
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Mr. Doolittle?
Mr. DOOLITTLE. Thank you very much, Mr. Chairman. I have no opening statement, and I look forward to hearing the testimony of the witnesses.
Mr. BOEHLERT. Thank you very much.
Mr. McGovern?
Mr. MCGOVERN. Thank you, Mr. Chairman. I have a brief opening statement.
With the passage of T21 a couple years ago and a comprehensive Superfund bill out of this committee, I believe that addressing the cost of Clean Water Act compliance is the most important infrastructure issue facing our country today, and that is especially true in the Northeast.
According to EPA's own data, the needs for wastewater treatment plant construction and upgrades are about $200 billion. More current industry estimates of the total need that include the cost of replacing aging systems exceed $330 billion. Unpublicized data from the agency's gap analysis reveals that the yearly gap in clean water spending, the difference between the total need and current spending, is about $6.1 billion.
Further, local governments are paying 90 percent of the clean water infrastructure costs. And due to the staggering costs of maintaining our clean water infrastructure, clean water is not only a health and environmental issue, but a socioeconomic issue as well.
I am disappointed, like the Chairman, that the Environmental Protection Agency has disregarded the distinguished Chairman and Ranking Member of this subcommittee's request for $1.35 billion for the Clean Water State Revolving Fund in the Administration's budget. I can tell you firsthand, from meetings with town administrators and selectmen in my own district—and I have communicated this directly to the EPA and we have talked about this before—that there is definitely a need to increase the capital pool for water infrastructure projects.
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Further, the clean water SRF provides a safety net for communities trying to pay for water quality improvements. And while the SRF provides a funding baseline, I maintain that we need to look long term at other permanent self-sustaining mechanisms to support clean water infrastructure. And I believe that the EPA should work with the committee to explore the possibility of implementing a Federal Clean Water Trust Fund to address the enormous clean water funding gap. When we get to questions, maybe we can talk more about this. But I agree with the Chairman. I am disappointed with the Administration's request, and hopefully we can work together to try to resolve that before the budget cycle is over.
Mr. BOEHLERT. Thank you very much, Mr. McGovern. You know, we all tell stories, and the longer we have been around here, the more stories we tell. But this situation with the State Revolving Fund reminds me of what happened during the Lyndon Johnson days. And I see some people in the room who were here then as young staffers.
People used to say to President Johnson, ''Mr. President, you can't have guns and butter.'' That was sort of an operative phrase. And so the President would scratch his head, and he would send up a budget to Capitol Hill suggesting we reduce funding for the school milk program. Well, of course, Congress would never hear of that, and we always restored the funds. And then we people would come back to him and say, ''Well, what about it, Mr. President?'' He would say, ''Well, I tried.''
I sort of feel that we are playing a little dance, as I mentioned in my introductory remarks, in dealing with this because you know it is totally unacceptable. The budget request last year, you tried a $500 million cut. We wouldn't accept it, overwhelmingly rejected that and added $500 million more, only to come back this year and see the same sort of game being played. And the disappointment is on both sides of the aisle. This is a vital, important national program. It is one that is used wisely by the States. This is not Washington just writing a blank check to something, or it is not giving out a lot of grants. It is saying we want to partner with the States in getting money to localities on a loan basis—at favorable interest rates, admittedly, because they are strapped, too, financially—to advance something that is important to all of us.
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The American people expect us to protect the water we drink. Now, I don't want to be lecturing, but I think it is important that I make this observation.
With that, let me turn to Mr. Taylor.
Mr. TAYLOR. Thank you, Mr. Chairman, I would commend all of your agencies for stopping the bleeding as far as the erosion of the environment.
What I would particularly like to hear, though, is what are we doing as a Nation to make things better. What is the Corps doing at the taxpayer's expense to make up for some of the mistakes it made over the years in trying to solve the flooding problem, for example, and causing, in my opinion, the huge dead zone in the Gulf of Mexico because of nutrient overload.
Since we have all admitted that we have lost hundreds of thousands of acres of wetlands around this country, what are we doing as a Nation to take our dredge bore and create wetlands with it? I know you have your prepared statements, but I would certainly like to hear some—rather than just asking for more money for more studies, I would much rather hear—to use the old analogy, it is better to light a candle than to curse the darkness. I would like to hear about some candles you guys are lighting.
Thank you, Mr. Chairman.
Mr. BOEHLERT. Thank you.
Mr. Boswell?
Mr. BOSWELL. Well, thank you, Mr. Chairman. I appreciate what is happening here today and your efforts. I am awfully tempted to respond about the game-playing remarks that you made. I am going to resist. I could, but there is even a game unfolding even this day. But it works both ways.
I do applaud your efforts in this area of clean water and things to do with the infrastructure and so on, resources and environment. You know, not too long ago we hit the 6 billion mark of people in this country—this world. Back, I am told, in the 1960's—I wasn't paying attention perhaps then, but we were told by actuarial types that the population was going to double by 2000, and it did a little quicker. And now I understand they are saying that it is going to double again in the next 30 or so years. We are talking about 12 billion or more people in that length of time that will be on this Earth as we know it.
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And so I think we have got a big challenge in the short term as well as the long term, and my life experience tells me if we wait until we hit a knee-jerk situation, we don't do very well. And if we try to run too hard and get the cart ahead of the horse, that doesn't work too well.
So I think we need to have a step-by-step-by-step process that we don't wait until the 15th year or the 29th year and say, whoa, the sky is falling, what are we going to do. I think we have got pretty good scientific data from these folks that this need is here, it is real, and I think we are going to have to address it with a little more effort in our dollars—I would agree on that part with the Chairman—and get this land ready for what is coming this way. It is a pretty sure thing.
I appreciate your efforts, and I am anxious to hear what you have to say this afternoon.
Mr. BOEHLERT. Thank you very much.
Mr. Baird?
Mr. BAIRD. Thank you, Mr. Chairman.
Very briefly, I want to commend particularly the Corps of Engineers, which has done an outstanding job in its mission in parts of my district, has saved literally hundreds of thousands, maybe millions of dollars with flood prevention and other projects, and we are very grateful for that.
I want to also just put in two quick words, one particularly from the Environmental Protection Agency perspective. The revolving fund for sewage treatment plants is a critical issue in many of our rural counties where mandates for Clean Water Act adherence are really stressing the financial ability of these small rural communities to pay. And I hope we can make sure we battle for enough funding in that area.
Secondly, a major problem in the West Coast increasingly, and on the East Coast as well, is the issue of invasive species, and I would be interested in your comments on that. We have a couple of problems: one, a little grass called the spartina grass, which is threatening to wipe out some estuaries, and then we potentially one day will have zebra mussels in the West Coast water system. And I would like to see us make a national commitment to prevent zebra mussels, because the Corps of Engineers, which runs those dams on the Columbia River, would be in terrible shape if we get zebra mussels in the Columbia River system, or anywhere else on the West Coast. So I hope you can make allowance for those issues in your funding.
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Thanks, Mr. Chairman.
Mr. BOEHLERT. Thank you.
Next we want to hear from Dr. Ehlers, but before we do so, I noticed a little item in the budget, a $50 million initiative on the part of the Environmental Protection Agency. I don't know if your fingerprints are on that at all, but I just want to point it out to you.
Dr. Ehlers?
Mr. EHLERS. Thank you, Mr. Chairman.
First of all, I was going to mention that issue. My fingerprints are on it only to the extent that I have been grabbing onto it so hard since I have seen it. I am very appreciative of the fact that that is in there.
I am a little concerned about the funding sources. I think we may have to find some other funding sources in order to make it become real. But I do commend you for the inclusion of the $50 million Great Lakes Initiative.
Those who don't live near there do not often realize the incredible resource that is for our Nation, the largest body of fresh water in the world, very valuable to our Nation and to Canada. We have to certainly preserve it, protect it, also protect it against other nations taking it, as they are currently attempting to do by shipping the water out. And I will be actively working against that. That doesn't directly relate to you, but it is certainly a matter of concern and something that our Nation has to address, along with Canada.
The invasive species question which was mentioned by my colleague a minute ago is a major issue in the Great Lakes. The economic loss is incalculable. Just in terms of the zebra mussels alone, which he mentioned, a huge expense to municipalities, the water supplies, the water intakes, to the power plants for their water intakes, but also to the average citizen.
I just read a column in the paper last week of someone who, very 2 years refinished the bottom of his boat, now has to do it once a year because of the zebra mussels. Well, that is a $200 to $300 expenditure. We have 800,000 individually owned boats in the State of Michigan. If you double the amount they spend on bottom maintenance just because of the zebra mussels, that far exceeds the cost it would have been to prevent that by very stringently requiring that they change their ballast water before and certainly not empty it in the Great Lakes system.
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In addition to that, one aspect of the budget I appreciate very much is the $1 million inserted for the Soo Locks program, and for the benefit of my colleagues, I would mention the Soo Locks are located by the Mackinac Straits in Michigan. All the Great Lakes boat traffic from Lake Superior to the east flows through there, an incredible amount of tonnage of freight. And those locks are very, very old, deteriorating rapidly. We need a new lock built immediately. Last year we put in some provisions in the bills for providing for funding for it. I appreciate your inclusion of $1 million for it for preliminary studies, and I hope we can soon get that project started because the existing locks are in such sad state of repair after many years of use that there is a threat to our shipping in that region.
So I wanted to point out those positive things. I am sure we will get into a number of negative things later, but I wanted to get that on the record at least.
Thank you.
Mr. BOEHLERT. Thank you very much, Dr. Ehlers.
Mr. Simpson?
[No response.]
Mr. BOEHLERT. Mr. Pascrell?
Mr. PASCRELL. Thank you, Mr. Chairman.
Mr. Chairman, of particular interest to me are the projects that the Army Corps will be implementing in New Jersey. Of the over $148 million requested for the navigation, maintenance, and construction projects in New Jersey, $53 million is earmarked for deepening the KillVan Cull in North Bay Channel. This is critical, obviously, to commerce for New Jersey in the metropolitan area. That is good news. If this level of funding is sustained for the next few years, the project should be completed in a few years.
The Army Corps has also shown its commitment to protecting our coastline in New Jersey by requesting $12 million for our shore protection projects. Flood control obviously is an issue that affects many parts of my State and the area. In light of the severe damage caused by Hurricane Floyd, it is reassuring that the Army Corps has the foresight to request over $10 million for flood control projects in New Jersey. $1.7 million of that would be in the Passaic River natural storage area, part of which is in my district.
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I do have some concerns, obviously, about a significant FUSRAP program. That program, which deals with the Formerly Utilized Sites Remedial Action Program, I would like to raise with the Corps. The project I am referring to is the thorium project in Wayne, New Jersey. This site was one of many under the FUSRAP program to be transferred to the Army Corps from the Department of Energy, and we had a lot of anxiety over that, but it has worked out very, very well up to today. We made a great deal of progressing getting this site cleaned up over the last 3 years.
While I was concerned about this transfer initially, I believe it has worked out, thanks to the work of the folks in the Corps. But I have two concerns. One, I notice that the budget request is $10 million higher than last year. I would like to get an explanation of that decision and an assurance from the Corps that this decision to reduce the dollar amount for this site, which has been based upon the fact that we are the only site in the whole country that went to court and won a case against W.R. Grace, will not have the clean up effort. The record is very clear in the courts, and the settlement indicates, that about $36 to $37 million will be coming into the project from the settlement.
I hope, however, that we are going to make sure that this project is completed on time, by September or October of this year. Even though we have had a court judgement, we want to make sure that that is enough money to finish the project by September and October.
The second question relates specifically to Wayne, in terms of the general dollars, is there enough money in the Wayne project to take care of the cleanup and make sure it is finished on time?
I am very concerned if these funds will prove to be sufficient, and we are going to have to work very closely through the year to make sure that that happens.
I think we have made great progress on this site. In fact, it has been a model of how the community and the Corps and other agencies that have been involved cleaning up a site and how to stay on it and be persistent.
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So I ask your indulgence and I ask you also to reassure us, regardless of the settlement, that we will have that site completed by September or October of this year.
Mr. Chairman, I thank you for allowing me that opportunity.
Mr. BOEHLERT. Thank you very much.
Dr. Horn?
Mr. HORN. Thank you, Mr. Chairman. And, Mr. Secretary, it is always good to see you. You bring good news and bad news.
I would first like to ask about the harbor services user fee. Have your lawyers advised you that this——
Mr. BOEHLERT. Dr. Horn, this is just introductory, opening statements.
Mr. HORN. OK.
Mr. BOEHLERT. We are not to the questioning yet.
Mr. HORN. OK, fine. Then put me on the questioning for the Secretary when you are ready for it.
Mr. BOEHLERT. You will be on that list, and he is forewarned.
Ms. Tauscher?
Ms. TAUSCHER. Thank you, Mr. Chairman.
I am, too, concerned about the funding levels for the State revolving funds, as you have mentioned. I have a series of questions regarding that, and the MTB issue contamination in California that I would like to have in the question and answer period. So I will be brief so we can get on.
Mr. BOEHLERT. Thank you so much.
Mr. Bereuter?
Mr. BEREUTER. Thank you, Mr. Chairman.
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I simply want to express my appreciation to the Corps of Engineers for recognizing the importance of the four State Missouri River mitigation project. You have come in with a suggested funding level which we appreciate. It is the first time I have not had to go to bat, and so thank you very much. I look forward to the question period.
Mr. BOEHLERT. Thank you very much.
Mr. Barcia?
Mr. BARCIA. Thank you, Mr. Chairman. I have a short statement I would like to make, and let me begin by thanking you, Mr. Chairman, and Ranking Member Borski for providing the committee with the opportunity to receive testimony on the budget request and program priorities for fiscal year 2001.
All of us know that a budget is more than mere numbers. It represents our collective wisdom regarding how best to solve the problem at hand.
Let me say at the outset that, based upon the numbers that I have seen in this budget, it does not appear that funding for water quality improvement programs is a priority. As many of our distinguished panelists can attest to, serious water problems persist across the country, and it is vitally important to the safety of many communities that they are resolved.
Specifically, many communities in the northeastern, midwestern, and northwestern parts of our country suffer from severe combined sewage overflow problems. In fact, the Environmental Protection Agency's own estimates state that the cost of this needed sewage treatment facility construction exceeds some $200 billion.
In response to this pressing need, I introduced bipartisan legislation, the Combined and Sanitary Sewer Overflow Control and Partnership Act, that addresses this critical problem. It is important to note that CSOs are the last intentional discharge of untreated sewage in this country. Many CSO systems date from the turn of the century which utilized the best technology at the time. But today these systems are grossly inadequate and antiquated. They must be re-engineered to meet the demands of modern society.
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It is our responsibility to correct this problem and provide the needed resources to the communities in our respective districts. Clean water should be an issue that unites us, and the diverse support my bill enjoys is proof positive of where we need to go on the important issue of clean water.
In conclusion, I look forward to working with our Chairman and Ranking Member and Members of the panel in moving the critical issues of combined sewer overflow, clean drinking water, and many other issues. I want to allude to the great job that my friend and colleague from Michigan did in outlining not only his support, but I think our support from the entire congressional delegation from Michigan about the issues that he eloquently outlined during his opening statement.
And I do have a question regarding the Middle Grounds Landfill which will wait until we get to the question and answer part of the hearing.
I want to thank you, Mr. Chairman, for allowing me to make an opening statement.
Mr. BOEHLERT. Thank you very much. And for the questioning, you are first after Dr. Horn.
Let the Chair make an observation. First of all, it is obvious that these issues before us are very important to this subcommittee because of the exceptionally good attendance here today. The House is in a pro forma session now in memory of former Speaker Albert. A leadership delegation is representing the Congress at the services in Oklahoma today. And as this committee always does, we consulted majority and minority on what we should do in terms of proceeding with the hearing, and it was agreed that we should proceed because we have a very ambitious agenda for the subcommittee for the year.
We are not the only ones meeting this afternoon. There are others. This should not in any way be interpreted as an insensitivity to this period of mourning for a very distinguished American. And I think we agreed on a bipartisan basis that Speaker Albert, who loved this institution so much, would want the work of the people to continue. So we are continuing.
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With that, let me also say, unfortunately, I will have to exit—and someone else will take over the Chair—for a 2 o'clock meeting with the Secretary of Energy about the home heating oil crisis in the Northeast, which will have some of us temporarily away. But the hearing will continue uninterrupted by those bells from the floor.
And with that, let me say we look forward to our distinguished panel: Dr. Joseph Westphal, Assistant Secretary of the Army for Civil Works, representing the Army Corps of Engineers; Mr. J. Charles Fox, Assistant Administrator for Water, and Mr. Timothy Fields, Jr., Assistant Administrator for Solid Waste and Emergency Response, both with the aforementioned Environmental Protection Agency.
Gentlemen, the floor is yours. We would ask that you try to summarize your statement, but the subject matter is so important that we are not going to restrict you to the traditional 5 minutes. But we would hope that you would appreciate that members are anxious to pass along some suggestions on how the document might be improved and to get an opportunity, as has been evidenced by one or the other, to ask a question or two.
Dr. Westphal?
TESTIMONY OF DR. JOSEPH W. WESTPHAL, ASSISTANT SECRETARY OF THE ARMY (CIVIL WORKS), ARMY CORPS OF ENGINEERS, WASHINGTON, D.C.; J. CHARLES FOX, ASSISTANT ADMINISTRATOR FOR WATER, U.S. ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C.; AND TIMOTHY FIELDS, JR., ASSISTANT ADMINISTRATOR, OFFICE OF FOR SOLID WASTE AND EMERGENCY RESPONSE, U.S. ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, D.C.
Dr. WESTPHAL. Good afternoon, Mr. Chairman, distinguished members of the committee. Thank you very much. I am delighted to be here. I did know Speaker Albert. I was a professor at Oklahoma State University for many years, and, actually, before that, I wrote a dissertation on Congress, which he helped me with when he was Speaker. So I owe a lot to Speaker Albert, and I am glad to be here because I am glad to be in the institution, as you said, that he really loved. And I thank you for saying that about him.
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Mr. BOEHLERT. You know, with that, I think it would be appropriate if we all recognized the Speaker with a moment of silence.
[Pause.]
Mr. BOEHLERT. Thank you all.
Dr. Westphal?
Dr. WESTPHAL. Thank you, Mr. Chairman. I am glad to be here, too, with two great colleagues, Chuck Fox and Tim Fields from EPA, and I look forward to hearing their testimony, too.
Mr. BOEHLERT. So do they.
[Laughter.]
Dr. WESTPHAL. Mr. Chairman, I thank you for the opportunity to come here early on in the session to talk to the committee about the President's fiscal year 2001 budget and the priorities for the Army Civil Works program. And I am pleased to come before you again and say that the President's 2001 budget funds a very strong program for civil works. The request is consistent with the funding levels enacted in Congress in recent years and is consistent with the President's overall domestic priorities.
Mr. Chairman, I believe we have come a long way in the past 2 years to reconcile differences on the program between the Congress and the Administration. And the President, I think, is hopeful that this budget that he presented Monday this week will provide Congress a well-balanced set of priorities that address a broad range of issues facing our Nation's infrastructure, our economy, and the quality of life for citizens.
The President's budget for the Army Civil Works program includes $4.1 billion for the discretionary program, comparable to the amount appropriated for the civil works program in fiscal year 2000, and $160 million above last year's budget proposal. With the non-Federal contributions and other funding, the total funding for the civil works program in fiscal year 2001 would be nearly $4.5 billion.
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Like last year, funding in this budget for the construction and maintenance of commercial channels and harbors is based on enactment of the harbor services user fee proposal. This new user fee would replace the harbor maintenance tax, a portion of which was found to be unconstitutional, and would collect about the same total amount of revenue as would have been collected under the harbor maintenance tax prior to the Supreme Court's decision.
Last year, Congress appropriated $750 million from the existing harbor maintenance trust fund for the maintenance of channels and harbors. The new user fee would make up $950 million of the fiscal year 2000 budget and would enable commercial harbor and channel work to proceed on an optimal schedule.
I am also very pleased to announce two new Army Civil Works initiatives in this budget: watershed/river basin planning and recreation modernization.
It has been nearly 20 years since the last major effort to understand and assess the complex relationships among various and often competing water resource issues. On a river-basin-wide basis, the Federal Government needs a comprehensive and holistic approach that considers the multijurisdictional, transnational aspects of water resources to work effectively in partnership with the States, the tribes, the counties, the river basin authorities and other local organizations. In short, these studies will follow your guidelines under Section 29 of WRDA 1986 asking us to study resources needs of river basins.
The Army Civil Works 2001 budget commits $2 million to initiate four broad basin studies. Two, the Rio Grande River basin and the White River basin in Arkansas, would be completed under section 29 of the Water Resources Development Authority. The other two, however—the Yellowstone River basin in Montana, and the Missouri and Middle Mississippi River—would proceed under specific authorizations granted in earlier bills.
The Corps of Engineers on the recreation side is responsible for more than 4,300 recreation areas at 456 lakes in 42 States. These recreation areas host 377 million visitors annually.
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I am very pleased that $27 million is included in this budget to initiate the recreation modernization program, which will replace or rehabilitate facilities at some of the more than 2,000 recreation areas that the Corps of Engineers manages directly. The combination of heavy use, lack of routine maintenance, and changes in visitor needs has caused significant deterioration of recreation facilities, most of which were constructed in the 1960's and 1970's, and the natural resource base at some of these lakes.
We hope to modernize about half the Corps' managed recreation areas over the next 5 to 10 years. These improvements include upgrading facilities, installing more family-friendly facilities, and improving general access to water-related recreation opportunities.
The fiscal year 2001 budget also includes $20 million to initiate Challenge 21, the Riverine Ecosystem Restoration and Flood Hazard Mitigation Program authorized in WRDA 1999. This initiative expands the use of nonstructural flood hazard mitigation options and restoration of riverine ecosystems to allow more natural rescission of flood waters and to provide other benefits to communities and the environment. Challenge 21 will create partnerships with communities and establish a framework for more effective coordination with key agencies.
The fiscal year 2001 budget for the Army Civil Works program also includes $82 million to initiate new investments with a total cost of $1.6 billion. Of that total, $410 million will be financed directly by non-Federal sponsors, including lands, easements, rights-of-way, and relocations.
In addition to the four comprehensive studies and two new programs that I noted earlier, the fiscal year 2001 budget will include four new surveys, one special study, one new preconstruction, engineering, and design project, and 12 new construction starts.
The Administration is committed to traditional missions of improving our navigation and transportation system, protection of our local communities from floods and other disasters, and maintaining and improving hydropower facilities across the country. In addition, in recent years, the Corps' responsibilities increasingly were expanded to include the restoration of aquatic and wetland ecosystems, on equal footing with our traditional missions.
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In summary, the President's fiscal year 2001 budget for Army Civil Works is a good one. It demonstrates a commitment to civil works with a strong program of new construction, a plan to solve the constitutional problem with the existing harbor maintenance tax, a firm commitment to maintain our existing infrastructure, increased use of civil works and environmental restoration expertise, and support for our ongoing missions.
With that, Mr. Chairman, I ask that my full testimony be added for the record. Thank you.
Mr. BOEHLERT. Without objection, so ordered.
Incidentally, all the complete statements will be entered into the record at this point.
Mr. Fox?
Mr. FOX. Thank you, Mr. Chairman. It is a pleasure to be here again, and I look forward to seeing you tomorrow as well.
As a Nation, we have made great progress in cleaning up our waters around the country, yet, unfortunately, very serious pollution problems remain. The most recent data we have from the States suggests that 20,000 water bodies in this country are, in fact, deemed polluted, and over 200 million Americans live within 10 miles of a polluted waterway.
Over the years, EPA has built a strong partnership with State agencies in achieving our missions together, and more recently we have made a concerted effort to build that partnership with other Federal agencies. And I am pleased to say that we have a much stronger Federal-State partnership than we have ever had in the past.
The President's fiscal year 2001 budget proposal is designed to further strengthen the State and tribal partnerships for clean water. In fact, since 1993, we have increased State clean water grants for non-point source pollution and for program management from $131 million to $410 million, or an increase of 212 percent. This demonstrates perhaps better than any other measure what I believe is a true commitment to the Federal-State partnership.
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Over 2 years ago, after taking a hard look at the serious water pollution problems around the country, the administration concluded that we needed to do something more. In response to this concern, President Clinton and Vice President Gore announced in February 1998 a major new interagency effort to improving existing clean water programs based on our existing statutory authority. The Clean Water Action Plan was the product of a cooperative effort of a number of Federal agencies and includes over 100 individual actions that will strengthen efforts to restore and protect water resources.
The Clean Water Action Plan has fostered a number of accomplishments, and it serves as a blueprint to guide clean water programs well into the next century. Congressional support for this has been critical, and we thank you and members of the Appropriations Committee in particular for your help.
The fiscal year 2001 budget will support a stronger and more effective effort to protect and restore our waters, and I will focus my remaining remarks on proposals for significant increases. I do want to mention, however, that Congress substantially reduced last year's request with the addition of a significant number of special projects. A comparable reduction in this year's request would put that sound management of our water programs at risk.
Turning to the fiscal year 2001 budget, the Administration is requesting an additional $50 million, for a total of $250 million, to help the States expand efforts to implement strong non-point source pollution control programs and to focus these resources on pollution control projects in watersheds they have identified as a top priority. The 2001 budget also includes an increased funding of $45 million in grants to the States under Section 106 of the Clean Water Act, specifically to support the development of TMDLs, which is going to be the subject of our hearing tomorrow.
The fiscal year 2001 budget includes $50 million in new grants to support Great Lakes cleanup projects in what are known as areas of concern, which have been defined by the International Joint Commission. This infusion of new funding would support the actions to restore and protect 31 individual areas of concern within the U.S. waters.
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Finally, for fiscal year 2001, the Administration budget requests that Congress give each State the discretion to use an amount equal to 19 percent of their annual clean water funds to support non-point source grants rather than loans. This is new flexibility will provide a major boost in funding for projects to reduce non-point source pollution and to protect estuaries.
The fiscal year 2001 request includes $800 million to capitalize the clean water SRF, and I have heard some messages here on this item loud and clear today. And I suspect we will talk more about this in questions and answers. I would say, though, that the Administration does stand by its longstanding commitment to work with Congress to reauthorize the SRF in a bipartisan way so that it can, in fact, meet the needs of this Nation into the next century.
I would note that our budget does include $825 million for the drinking water SRF, which is an increase of $5 million, and thank you, Mr. Chairman, for the opportunity to present our views.
Mr. BOEHLERT. Thank you very much.
Before I introduce Mr. Fields, I want to point out something that was inadvertently done. Secretary Westphal, your nameplate says ''Honorable,'' and Mr. Fox's and Mr. Fields' does not say ''Honorable.'' Let me assure them that we consider them to be very honorable. They are, and we enjoy working with them. And next time here we can guarantee that your plate will say ''Honorable Fox'' and ''Honorable Fields.''
[Laughter.]
Mr. BOEHLERT. The Honorable Mr. Fields.
Mr. FIELDS. Thank you, Mr. Chairman.
Mr. BOEHLERT. Of course, that is all dependent on how you answer the questions today.
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[Laughter.]
Mr. FIELDS. This is a test.
It is a pleasure to be here before this subcommittee to talk about the fiscal year 2000 and particularly the fiscal year 2001 budget priorities in the waste cleanup program arena at EPA, and I look forward to discussing those programs and responding to any questions this subcommittee may have on those programs.
For the programs in the Office of Solid Waste and Emergency Response at EPA, we are pleased to say that the President's budget provides the necessary funding needed to continue our effort to protect public health and the environment through the Superfund, the brownfields cleanup, and the oil spill programs at EPA.
Let me start with Superfund briefly. The President's fiscal year 2001 budget requests $1.45 billion for the program, an increase from the $1.4 billion budget enacted for fiscal year 2000. The President's budget will allow us to stay on track to complete construction at 900 toxic waste dump sites by fiscal year 2002.
The Superfund program has become, we believe, a real success story. More than three times as many Superfund sites have had construction completed in the past 7 years than in all the prior 12 years of this program combined. More than 92 percent of the Superfund sites have had construction completed or construction underway. Approximately 1,000 Superfund sites have had the final remedies selected.
We have also had great success with our emergency removal program, with over 6,000 removals done since the program began to deal with emergency response and immediate threats. Much of the work at toxic waste dump sites is being done by responsible parties, with 70 percent of the cleanup being done by responsible parties in this program, responsible parties have committed $16 billion to clean up toxic waste sites. That is money that the American taxpayer does not have to provide. We believe that targeted Superfund legislative reform on those changes that the Administration and Congress can agree on would be the best approach.
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The President's budget also requests $92 million for the successful EPA brownfields program. The funding will allow EPA to continue our effort to address the concerns of communities, more than 300 communities now across America. This effort has already resulted in $1.8 billion in private and other public sector investment, more than 6,000 jobs. Thousands of brownfield sites being assessed.
Finally, the budget also provides $15.7 million in fiscal year 2001 funding for the oil spills cleanup and prevention program.
[A supplemental statement by Mr. Fox follows:]
Each year there are close to 20,000 oil spill notifications received by the National Response Center. Over 80% of these notifications are in EPA's area of jurisdiction. The majority of the significant incidents that occur do so in EPA's area of jurisdictions. Many of these are very large—100k gallons or more.
That effort will continue with this budget and allow us to continue our efforts to prevent oil spills, to the extent we can, for the 450,000 facilities regulated by the Oil Pollution Act and Section 311 of the Clean Water Act.
So, Mr. Chairman and Members of this Sbcommittee, with your help and the help of many others, we have made tremendous progress, we believe, in addressing environmental cleanup and protecting public health and the environment through those programs over the years. However, the job is not done. Much more needs to be achieved. The fiscal year 2001 budget reflects the Aministration's commitment to continue our job to clean up toxic waste sites, to address brownfields properties, and to prevent oil spills from occurring.
This concludes my prepared remarks, and I will be happy to address any questions you might have.
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Mr. BOEHLERT. Thank you very much.
I am going to ask Dr. Horn if he would take the Chair. I have to temporarily be away for the meeting with Secretary Richardson, and we will continue with the questioning, and I will be back before the questioning is completed.
Dr. Horn? First let me recognize Mr. Blumenauer.
Mr. MCGOVERN. Mr. Chairman?
Mr. BOEHLERT. Yes?
Mr. MCGOVERN. Since some of us have to go to the same meeting you do, is it possible that you could yield to me for one quick question?
Mr. BOEHLERT. Well, we have got others, too, going the same place, and we will all get back. We hope to get it over with in a hurry.
Mr. MCGOVERN. You think we can straighten out the oil crisis and——
Mr. BOEHLERT. We are going to do our level best to do so.
Dr. Horn?
Mr. HORN. [Presiding.] Dr. Westphal, I was interested that you had a doctoral dissertation and the late Speaker was part of it. What was the title of that dissertation?
Dr. WESTPHAL. It had a very long title, but what it was, it was a study of congressional staffing and how members organize their staffs and to what extent—they say it was a regression analysis—to what extent the way you organize your staff affects your re-election margins.
[Laughter.]
Dr. WESTPHAL. There was a positive correlation, by the way.
Mr. HORN. Well, for the Horn Memorial Library, I will be glad to buy any copies that are still around. So let me know. We have got 9,000 volumes so far. You will be 9,001.
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Now, getting down to business, your budget funds maintenance at the same level as this year, and the backlog of maintenance continues to grow. I am going to ask you to look out into the future, say 10 years from now, and tell us what do you think will be the state of our harbors, our inland waterways, and our flood control infrastructure if we continue to fund maintenance at the same level that we do today?
Dr. WESTPHAL. Well, Mr. Chairman, we have seen a pretty good increase in our O&M part of the budget in the last 2 years, and it is partly because I felt that that was the one part we had to really do a great deal to catch up on. We have a huge backlog of work. We need to recapitalize our infrastructure. It is a momentous task.
And I think personally that we as a Nation have to readdress this issue of what do we do about our aging infrastructure in some parts of the country and the need for new infrastructure in other parts of the country, and not just the infrastructure that I would deal with in the Corps of Engineers but the same infrastructure that Chuck Fox deals with at EPA, whether it is, you know, water treatment or locks and dams or any of that.
We have also—when you talk about our backlog, we also have a significant number—and I don't know what that is, and I propose that we are going to try to come up with some ideas for you this year. We have a significant number of projects out there that will never really be built. They were authorized many, many years ago. They are being carried along with small amounts of money, either because of environmental reasons or because there are no sponsors or because they are not feasible. They are not going to get built. And at some point I think we have to make the tough choices, you and us, to think about deauthorizing some of these projects and cleaning the sheet and seeing what is our need out there—not to diminish the amount of money that we are putting into it, but to put the money in the right places. And it is a tough decision, but I think it needs to be made, and it needs to be made fairly quick.
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To answer your question, as I look into the future, we believe that we have got to address this critically now, and we are going to try to do that. The Chief of Engineers and I are working on a plan to try to come up with some form of better understanding from both a data aspect as well as an information aspect about what the needs are out there for water-based infrastructure.
Mr. HORN. Well, I thank you for that.
I believe Mr. Barcia had a question, and since this is on the maintenance thing, I yield to him. We will start with 5 minutes and then alternate between sides.
Mr. BARCIA. Thank you, Mr. Chairman. I will try to be very brief.
Dr. Westphal, I want to thank you for your appearance today before the subcommittee and also the other distinguished panel guests. I just wanted to make a statement about, as you have outlined, as Mr. Fox did, the progress that we are making in addressing water quality issues, but up in Michigan we have so much shoreline, in terms of the upper peninsula, as well as the lower peninsula, more shoreline than any other State. We have a lot of costs that simply are not being borne at all by State government.
In our State revolving fund for example, I have a community out in the thumb of Michigan which has excessively high levels of lead, arsenic, and barium that far exceed the Federal and State standards, and those individuals cannot consume their water. So we have been working with the House Appropriations Committee Chair through the EPA to secure funding to help in the cost of the construction.
But I wanted to point out to you that the State Revolving Fund was of no help at all. All of the funding for the past 5 years as well as for the foreseeable future, we have been told by State government, all of the funding in the State Revolving Fund goes to just two communities, Detroit and Flint. And if you are a resident beyond those two communities, there is virtually no help that the State Revolving Fund can offer.
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But, Dr. Westphal, I just wanted to comment about a project that I had authorized through WRDA with the Corps of Engineers, and at the time we talked with your staff, they said, well, that is a manageable project, we think, at the cost of $1 million, we could probably be of some help without getting the money actually appropriated from the House Appropriations Committee.
What I would offer today is if that is not a possibility, the specific project, which I better explain to you, is we have a Middle Grounds Landfill, I think the fourth most toxic site in the Midwest. Unfortunately, my home town of Bay City constructed a landfill in which PCB-laden transformers were placed in various cells of this landfill back in the 1950's. And so this island, which has this very toxic landfill on it, is leaking precipitous amounts of PCBs and other heavy metals into the Saginaw River, into the Saginaw Bay. And one of the problems that we have had is shoreline erosion of the island on one side.
So I would ask for an authorization of $1 million to construct a seawall by the Corps of Engineers to reduce the soil erosion. The soil is very contaminated, and we can thereby reduce the amount of contamination going directly into, you know, the river, the lake, and ultimately into the fishery. We also have public health warnings in which we were not supposed to consume more than 3 ounces of the fish each week for pregnant women or the elderly or young children because of the health risks that those heavy metals pose.
Of course, our sport fishery is very popular and provides a lot of economic benefits to local businesses. But if there is a way that the Corps could be helpful in identifying the funding, I will appear before the House Appropriations Committee to seek approval for the $1 million. But that is a project that for a relatively minimal investment we could really be helpful in preventing some of those PCBs from getting into our lakes and into our Saginaw River.
I want to thank all of you for your appearance here and thank the EPA for their help and assistance on our water project, and, Mr. Fox, I appreciate the progress we are making. It is just that when Congressman Ehlers and myself look at the demands of the municipalities in Old Grand Rapids, Port Huron, Saginaw, Midland, not to mention Detroit and Flint, have these huge bills that they are facing to try to deal with the costs of an effective remedy to our combined sewage overflow problem. We know we are making progress. We just wish we could secure somehow more resources than you have to deal with more problems, because water quality problems are a problem, not only in Michigan, the Great Lakes, but across the country.
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So thank you, Mr. Chairman. I appreciate that.
Mr. HORN. I thank the gentleman.
We now recognize the gentleman from California, Mr. Doolittle, for 5 minutes.
Mr. DOOLITTLE. Thank you very much, Mr. Chairman.
Dr. Westphal, thanks for coming over today. Last year's WRDA bill authorized the Congress to conduct a study of additional measures that could be taken at Folsom Reservoir to increase flood protection for Sacramento. I wonder if you could give us an update on that study.
Dr. WESTPHAL. I think we had about $5 million in appropriations for that, and I think we are also on schedule to do those studies, to look at further flood protection for Sacramento. So I think everything that I have been told by the Corps is that we are on schedule. We are working that and we should make good progress this year.
Mr. DOOLITTLE. Am I correct in understanding that what you are currently preparing to transmit to Congress is only to be considered as preliminary information?
Dr. WESTPHAL. I think that is correct.
Mr. DOOLITTLE. I have heard in this preliminary information that apparently it is being represented that the Folsom Dam can be raised by up to 11 feet for as little as $150 million. Can you confirm that?
Dr. WESTPHAL. I have not heard that, no. I would be glad to check into it and be glad to get back to you on it.
Mr. DOOLITTLE. OK.
Dr. WESTPHAL. But I have not heard that.
Mr. DOOLITTLE. As a follow-up to that question, should that prove to be the case——
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Mr. HORN. Without objection, the response of the Secretary will be put at this point in the record.
Mr. HORN. Go ahead, Mr. Doolittle.
Mr. DOOLITTLE. As a follow-up to that last question, if that figure of $150 million should prove to be accurate, I would like to know if that cost reflects the construction of a permanent bridge downstream of Folsom Dam?
Dr. WESTPHAL. This is not a new road on the dam, but a separate bridge is what you are talking about, right?
Mr. DOOLITTLE. Right, because what has been under discussion is if they raise the dam by some number of feet, up to 11 feet, that would then occasion doing a new bridge and basically getting the traffic off the top of the dam, as is now presently the case.
Dr. WESTPHAL. I remember last year when you and I were talking about some of these issues, that was one of the things that we did talk about. We also talked about the impact of raising the dam and the effects on various communities around the lake.
Mr. DOOLITTLE. Right.
Dr. WESTPHAL. So I guess I just need to get you a more detailed answer to where we are today on all of this and what our schedule is for the rest of the year.
Mr. DOOLITTLE. Well, that leads to my next question, and that is, when would you anticipate submitting a full feasibility study and chief's report on this project?
Dr. WESTPHAL. I don't know the answer to that. Let me get back to you on that.
Mr. DOOLITTLE. That is fine. Is it my understanding—I just want to confirm that it is yours—that the policy of the Corps is that a full feasibility study should be conducted before a project is recommended for authorization? Isn't that the case?
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Dr. WESTPHAL. Yes.
Mr. DOOLITTLE. And could you just briefly explain why the Corps feels that policy is appropriate or give us the underlying rationale for it?
Dr. WESTPHAL. Well, it is the method that we use, of course, to determine that projects are economically feasible and environmentally justifiable and that the design and the work is appropriate before we come to you for an authorization and a request for appropriation. So doing it before that would be simply—in my opinion, would be somewhat foolish to move ahead without those guarantees being there for you and for us.
Mr. DOOLITTLE. And I guess the reason for that is that you won't be able to make that analysis without the chief's report; isn't that correct?
Dr. WESTPHAL. Right.
Mr. DOOLITTLE. OK. Thank you very much.
Thank you, Mr. Chairman.
Mr. HORN. I thank the gentleman.
We now have Mr. Blumenauer, 5 minutes, the gentleman from Oregon.
Mr. BLUMENAUER. Thank you, Mr. Chairman.
Dr. Westphal, I appreciate your reference in your testimony to new initiatives and new flexibility. I particularly am pleased with the items for the watershed/river basin planning and the comprehensive way you have identified four projects coming forward, and, of course, $20 million for Challenge 21.
You mentioned that part of what we need to be doing is just taking a look at all of the projects that are on the books now, that in some cases people reasonably could review and find that resources could be better directed. Some projects that would actually be damaging to the environment knowing what we know today.
I am curious what you have in the budget in a broader context. Do you have the flexibility to be able to re-evaluate the work that your agency is engaged in? Or are there things that this committee needs to do in the course of our work and the budget process to help clarify so that you can, in fact, squeeze the most out of the budget while providing maximum enhancement for the environment.
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Dr. WESTPHAL. Well, I think that is a very good question. I think, you know, we are sandwiched in between a program that is heavily earmarked with very little flexibility to be able to use funds for new and innovative and creative thinking and studies and analysis. We are very project driven in our budget. That is number one.
In our authorizations, similarly, we have authorities that have been given to the Corps of Engineers—to the Secretary of the Army, I should say, over the years, some of which have not been funded and, therefore, have not been carried out. And, in fact, the authority that I would like to use for two of these river basins' comprehensive studies is an authority that comes out of the 1986 WRDA bill that tells us to do comprehensive river basin studies and authorizes the appropriation of $5 million. And, to my knowledge, that $5 million was not appropriated, and the studies were not done.
There was something the Corps did—and we are trying to get a hold of it—some general review done very quickly, but there are lots of areas in previous WRDA bills that allow us from time to time to exercise this, and we are very creative and the Corps is very creative in helping me in sort of figuring ways in which we can move forward on some of these things.
In this particular case, we are finding that the Corps of Engineers of years and years ago that worked fairly independently today can't function without a partnership with EPA, Fish and Wildlife, and the States. In addition, it has non-Federal sponsors that in most of the projects are partnering in with us, numerous State agencies.
So nothing gets decided—in your part of the country we are dealing with so many issues that are so complex that we are all at the table. We can't do it individually.
So the purpose of this look, the President wants to say, look, we need to—not stop, but we need to assess. If you take Rio Grande, a huge river, starts in Colorado, ends in the Gulf of Mexico. And it is impacted by everything from agriculture to ranching, to water supply for big cities, huge cities in Mexico, agreements, international agreements, contamination, pollution. It is incredible. And we need to look at comprehensively what we are all doing there, the States and us.
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Mr. BLUMENAUER. If you have some of the recommendations that would, in fact, clarify the flexibility that is needed or that there are areas that we can, in fact, assist you. We tried in last year's legislation to try and clarify language, for instance. We tried to make improvements in cost-benefit analysis for example. And the extent to which you would be willing to share with us some of the specifics, I think the committee ought to be very sympathetic to giving you the tools you need for a significantly constrained budget, massive problems.
Dr. WESTPHAL. Yes, I would like to do that. I would really like to do that. But I also would like to do it in concert with the committee, not—you know, to talk to you and the staff and the members. Mr. Doolittle and I have worked for 2 years trying to figure all the complexities of the issues in his part of the country, and they are hugely complex because you have got all these different, sometimes competing interests, but you also have the weight of how we do our studies, the weight of how we make decisions. And I think it needs kind of an overview, and perhaps I can work with the Chairman and the Ranking Member to do that.
Mr. BLUMENAUER. Thank you, Mr. Chairman.
Mr. HORN. I thank the gentleman, and we now yield 5 minutes to the gentleman from Michigan, Mr. Ehlers.
Mr. EHLERS. Thank you, Mr. Chairman.
First of all, Dr. Westphal, you commented a little while ago that it is very important for the Corps to remember that it not only must deal with new projects, but maintenance or replacement of older ones, and that relates back to my opening statement about the Soo Locks. It is a very clear case of a very important facility that needs replacement, and I appreciate your statement on that.
The rest of my comments will be for Mr. Fox, and in particular addressed to something I discussed in my opening statement, the proposed new initiative of $50 million for, quote, ''areas of concern'' in the Great Lakes. And I am not sure why ''areas of concern'' is in quotations in the budget document. But I assume this a follow-up to the Vice President's proposal on the campaign trail that this is a good thing, and I agree it is a good thing. But I have a couple of questions.
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The Vice President's press release lists 31 sites. Are these the sites that would be addressed by this, or would this be subject to examination by the EPA through the grant-making process? Also, just a side question, last year you testified before us that you didn't like the grants process, and this is a new proposal to provide grants. So I am wondering where you are going with this proposal.
Mr. FOX. To answer a couple of the issues raised by you, first, I would just like to clarify that the Vice President's announcement was not a campaign-related announcement. It was part of his official capacity of what was going to be in the President's budget, and it was in the context of developing the President's budget that this program came to be.
The reason it is in quotes is because not everybody is as familiar with the Great Lakes as you and I and would know immediately that these areas of concern, in fact, have a very precise definition in the context of the International Joint Commission. And it is our intent that these grants would be eligible only in those 31 areas that are partially or wholly within the United States. These grants would be available for a wide range of activities, including land acquisition, wetlands management, stormwater control, sediment remediation. And the reason we thought that grants were important in this case is I believe that we have lagged in our progress on these areas of concern, in large part because of a lack of funding. And we have put a very steep match on this, a 40 percent non-Federal share, and it is our hope that we will leverage a good deal of non-Federal dollars towards these projects.
Mr. EHLERS. So there will be a large number of sites that would be considered? You envision this being an ongoing program that would continue to address these areas of concern as they are redefined each year?
Mr. FOX. That is our current thinking. Obviously, this is a 1-year budget document, and this might be this Administration's last budget.
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Mr. EHLERS. OK. I appreciate learning it is not a campaign issue.
I have several other questions about it. As I mentioned in my opening statement, I am concerned about the funding, and I am wondering why you are proposing funding it by cutting the revolving fund, which already is short of money, and also the members' priorities, but in particular, aren't these programs trying to achieve the same sorts of goals of cleaning up the Great Lakes and that area? Also, relating to the funding, incidentally, I am curious why a new funding line item isn't presented for this and why it basically is coming out of—most of that appears to be coming out of members' grants, tribal grants, and so forth?
Mr. FOX. We really believe this is new money. The annual process of building our budget usually starts by deleting what we believe were a series of congressional special projects that were added. That is nothing new from the way we built our budget every year. So I really look at this as new money, and hopefully the Appropriations Committee will look favorably upon it.
Mr. EHLERS. In other words, it is your judgment what grants to award is better than the Members of Congress' judgment of what grants to award?
Mr. FOX. It is very difficult to respond to this, but I can tell you——
Mr. EHLERS. You don't have to respond.
Mr. FOX. Well, it is a very important issue for my budget. Just so that you have a flavor, there were a total of $450 million worth of congressional priorities added to our budget, which we then had to absorb in our base budget and cut other programs as a result of that. As you know, there is no free lunch, and the obvious result is that many important environmental programs go unfunded.
Mr. EHLERS. It gets to be a matter of judgment. Those of us who live close to the problems think we have a good idea of what the priorities are, too.
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The authorization of this program, are you planning to propose authorization language? Or are you expecting to simply handle it through the appropriations process? Will you be coming back to us with language proposing authorization?
Mr. FOX. There was language included in the President's budget that would authorize these grants programs. I think it is fair to say that these grants programs is very much in keeping with the spirit of the current Great Lakes provisions of the Clean Water Act. We had envisioned that this would also include grants to municipalities which some have argued aren't specifically authorized, and so we have taken the cautious approach and proposed budget language that the appropriators could include in the appropriations bill which would authorize the projects.
Mr. HORN. I thank the gentleman.
Mr. EHLERS. May I just respond? I think we probably should authorize it separately, and I will be looking into that.
Thank you.
Mr. HORN. The gentleman from Mississippi, Mr. Taylor, 5 minutes for questioning.
Mr. TAYLOR. Thank you, Mr. Chairman.
Mr. Westphal, I was a bit disturbed to hear you say that some of the projects that have already been authorized should be dropped. I would hope that one of the projects that you didn't have in mind to drop would be the Louisiana Mississippi estuarine project at the Bonnet Caree Spillway. I realize it has run into some concerns of some people, but in particular, what troubles me the most is the apparent attitude of the Corps, Well, if we can't have it exactly our way, we won't do it at all. If we can't use the Bonnet Caree Spillway as the means of getting Mississippi River water into Lake Borgne, then we won't do it at all, when there are other alternatives such as possible diversion of the industrial canal in New Orleans where the lock is going to be replaced at public expense, anyway, going further south of New Orleans into what is just a marsh area, anyway.
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It is important. The seafood industry in Louisiana, the seafood industry in Mississippi and Texas, that is in the Mississippi River basin. And with the loss of every acre of wetlands, we are losing part of the seafood industry. And the Corps created this problem in solving the flooding problem. And I think the Corps has the obligation to solve this problem as well. And so I would certainly encourage you to pass that word on to the New Orleans Corps, which has the responsibility for this, that maybe we should look at some other options. It is not that often when the States are willing to pony up to the extent that the States of Louisiana and Mississippi have been in order to make this happen.
The other thing that I would ask you—and, again, I know your time is short, but I did read with great interest where you are including $28 million for ongoing environmental restoration, including, I think, $4 million for the beneficial use of wetlands. And I know this is not the forum to talk about your budget in the micro sense, but I would hope you would find the time or someone from your staff would find the time to come visit with me about what can be done.
I am very pleased to see that the dredging of the Wolf River was included in the President's request, and since it is fairly dear to my heart, I hope that can be one of the places where we first use the beneficial uses of dredge bore right there in Bay St. Louis, Mississippi.
Again, I am trying not to beat up on the Corps. I do realize that there is a tremendous loss of wetlands. I would just like to use this opportunity that when we create the material, that we put it to good use when we can put it to good use.
Dr. WESTPHAL. We are spending quite a bit of money on studying and analyzing the beneficial uses of dredge material, and we need to do more of that and will continue to do that. And our budget for things like environmental restoration and the kind of work that we want to do and move forward to in places like southern Louisiana, for example, is growing by leaps and bounds in this area. Environmental work today is about 22 percent of our budget. It is over $1 billion. And that is $1 billion that we didn't spend 7 years ago in environment.
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So we have gone from doing all of that, continuing to do all of that traditional work, still doing the flood control, still doing the navigation work, still, you know, maintaining the hydropower. And yet we are also spending now about $1 billion on a whole sort of environmental work, which includes environmental restoration. Our projects are more environmentally sensitive. The Corps is, as an agency, I think getting greener. I think the Corps has changed. The Corps has made the transition. It is a new organization. It is still, I think, the premier engineering organization in the world. Nothing matches it. But I also think it is an organization that has adapted to a whole bunch of different and new needs, and is bringing in more environmental scientists into the workforce and looking to do what I think several of you have said, you know, we need to be more creative and maybe flexible in some cases.
Mr. TAYLOR. While I still have the yellow light and since I deal with three different Corps districts in my congressional district, I have a casual observation that there is an inconsistency in the enforcement of the wetlands regulations as far as the granting of permits. And I would again like to bring this to your attention and ask the question: Are there different requirements for different Corps districts? Because in some areas that I observe, it sure seems a lot easier to get a permit to fill a wetland and put up, for example, a shopping center, and then in the next district—and I believe the law ought to be the same for everyone. If you would be tough on the law, wonderful. If you would be lax on the law, I am sorry to hear that. But at least it ought to be the same regardless of where a person resides and regardless of where they ask for that permit.
Dr. WESTPHAL. There is very detailed guidance given to the field. That is overseen by my office as well as the office of the chief. And we try very much to have an even keel program across the country. But conditions do differ, and, you know, the program is managed by human beings. And so sometimes you are going to have some inconsistencies. I can't tell you that it is not going to happen.
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But we do try very hard to review that guidance and to continue to work with the Corps at the district level all over the country to ensure that there aren't these kinds of huge discrepancies. We are going to find some from places to places, and your part of the country is one where there is a huge amount of that kind of work going on, lots of permitting, lots of requests for permits, and lots of attention to the issues surrounding wetlands. And so we are particularly focused on those parts of the country where we have the greatest wetlands losses, which happen to be, again, in your part of the country, and some of the Atlantic coastal States like North Carolina and South Carolina, and trying to be evenhanded, but at the same time try to provide guidance that makes sense and work with local folks to do something that is good for the environment but also good for the economy and the region.
Mr. HORN. I thank the gentleman. I now yield myself 5 minutes for questioning as a member.
This is concerning the harbor services user fee versus the harbor maintenance tax. Your legal advisers, are they assuring you that there would be no problems with the Federal courts if the harbor services user fee was implemented?
Dr. WESTPHAL. We have really spent quite a bit of time when we developed the proposal last year addressing that very question and trying to make sure that we were crafting a proposal that would meet the Supreme Court test. We think we have that. So we feel comfortable that the proposal that now you have here and hopefully will deliberate on this year will sustain that test.
Mr. HORN. In the course of developing this harbor services user fee, did you look at the possible impact of one harbor against another? And would that turn away traffic, containers in particular, to other ports?
Dr. WESTPHAL. Absolutely.
Mr. HORN. I will give you an example, Seattle, let's say, a major port, number three on the Pacific Coast. I have got the other two, one and two, which is Long Beach, one, L.A., two. But Seattle, they can just go over to Vancouver in Canada if they don't like your harbor services user fee.
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Dr. WESTPHAL. Right. Again, this is another area where we spent a considerable amount—in fact, I kept sending folks back to the drawing board on this until we had these kinds of questions answered, asking questions about routes, about, you know, how does shipping really take place. When they come from the Far East, say, to the Western ports, your ports and Washington, Oregon, how do they come loaded? Where are they likely to find economies of scale to deliver that cargo?
We went over this in unbelievable detail to try to assure that, first of all, we minimized competition between our ports so that we don't create haves and have-nots by this very proposal within the United States, and at the same time make sure that we don't create a proposal that does just what you mentioned, which would make it more feasible for traffic to go into Canada.
Now, this is a fluid and ever changing and growing industry, and, you know, how traffic moves from Canada into the United States, with NAFTA and what kinds of flexibility there is to move stuff from, say, Halifax to California or from Vancouver to New York, you know, I don't know. But, I mean, we looked at that as well. A lot of that infrastructure is not in place. A lot of the cargo that comes into your ports actually, you know, gets on a truck and gets trucked to New York or the East Coast, sometimes Savannah or Charleston, gets put on another boat and gets sent to Europe.
Would that likely to happen, to go through Canada, come down into the U.S., or go across country? You know, those are things that we are going to have to monitor. But we feel we have got a proposal that stands that test as well.
Mr. HORN. How worried are you about the European Union's objection to this particular fee?
Dr. WESTPHAL. Well, the more formal objection we received after we submitted the fee. I have asked for an analysis of that. And I participate in an international organization of ports that meets every year. This year we are meeting in London sometime at the end of the spring, and I intend to attend that and hear directly from the Europeans as to how they feel about it.
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Mr. HORN. Well, I thank you. Let me just move to the major project in my area, and I appreciate the funding level you have put this time, because we have always had to go over it for the previous years, and we have been fortunately successful since it affects a half a million people to get $50 million 2 years ago, $50 million in the project this year, and that is the Los Angeles County drainage area, the L.A. River that has several million people on either side of it, but half a million are actually affected by it. And you did put in $9.8 million for construction and $3.9 million—$4 million for O&M. And I guess my query there is: What is the degree of construction needed before FEMA can remove the flood insurance tax? Many of the people feel this is just wrong for them to be almost out of the floodplain, and really we haven't had any particular big floods, and now you are doing such an efficient job of putting up the levees moving north, also getting the levees going south.
What is the rule of thumb there?
Dr. WESTPHAL. If you will allow me to get back to you with a correct answer, an accurate answer, but I am going to take a guess, if you don't mind, and say that I think we are ready to do that this year. I think we are ready to move towards that certification, because the project will be completed, I believe, this year. But let me get you for the record.
Mr. HORN. That would be great news for half a million people.
Dr. WESTPHAL. I was down in L.A. a couple of months ago, or a little less than that, and spent quite a bit of time with a number of stakeholders on the L.A. River, and there are some great opportunities to continue to do some very environmentally friendly kinds of things along the river, to provide opportunities for people to recreate and to use the river and to have a clean and healthy place to play and to ride bikes and all that. So there are a lot of opportunities down the road beyond just simply protecting against flood.
Mr. HORN. I agree with you.
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Dr. WESTPHAL. And, of course, there is the controversy with all that land that.
Mr. HORN. Yes, I agree with you on that, and I would be grateful if we can get that flood tax off people's backs. They pay taxes, and we have spent those taxes, or we will have. So I thank you.
Now, Mr. Baird, the gentleman from Washington, for 5 minutes.
Mr. BAIRD. Thank you, Mr. Chairman, and I appreciate your comments pointing out the challenges and competitive disadvantage that the tax could impact with our ports such as Seattle and Vancouver in Washington.
Dr. Westphal, I want to reiterate my thanks, and I want to thank Colonels Rigsby and Butler from our district, from the Seattle and Portland offices. They do a super job out there. They have served this country and our district honorably.
I want to do two things: One, ask you if your agency has considered this issue I mentioned earlier of zebra mussels, and if your agency would be willing to work with my office and the other agencies involved to address this, because I see it as one of the major threats to the Pacific Northwest. Is that something you are aware of?
Dr. WESTPHAL. I am aware of that, and I am not sure whether we are actually doing anything on the zebra mussel there. But we are spending this year, I think, about 700—or we are asking for about $700 million—$700,000, not $700 million—$700,000 plus some R&D dollars to do work on invasive species.
Mr. BAIRD. OK. We might want to chat with you at some point in the future about the 100th Meridian Initiative and working with other agencies, and I appreciated my colleague Mr. Ehlers' comments earlier. This is multi-billions of dollars that we could save for every year that we prolong the zebra mussel coming in.
Secondly, there is an important project that I appreciate your agency's work on and the Corps' work, and that is a flood prevention project on the I–5 corridor in what is called Lewis County, the city of Chehalis. This is an area that flooded in 1996, basically blocked the entire north-south access along Interstate 5. Estimates go as high as $40 to $50 million a day in cost due to the blocked transport, and I want to thank your agency for that and look forward to working with you on that.
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Mr. Fox, I want to revisit this issue of the State Revolving Fund. There are a number, as I mentioned earlier, of rural communities, particularly one in particular, the aforementioned Chehalis, by coincidence, which has really played by the rules and has kept its sewage treatment plant up to steam, et cetera. And as the target has changed over the year with new TMDL standards, et cetera, they are consistently being required to meet higher and higher standards with very little Federal support.
Have you folks considered that aspect as you look into establishing new standards and how that might relate or not relate to your funding request?
Mr. FOX. Let me start by saying that you will have no disagreement from the Administration that there are sizable needs out there, that, in fact, there are many communities that are not as well positioned to meet those needs as some others, and that this is a very significant national issue.
I think the fundamental challenge is we need to find a way to work together, the Administration and Congress, and reauthorize this law in a way that makes sense for the future. This law expired in 1994. The last time Congress revisited it was 1987. The Administration has provided more than twice the amount of dollars that the program was originally authorized. We can do a lot of finger pointing, but I think we really need to come together and look towards the future.
I would really argue, too, as we look towards that future, that the new SRF has to be a lot more flexible than the one in the past, and I think the example that you gave is precisely the kind of challenge we face. Not all communities can meet an interest rate that is only 2 percent below the market. Some are going to need 0 percent. Some of them might even need principal forgiveness or grants. And I think the new account needs to be flexible to be able to respond to a range of these kinds of needs.
Mr. BAIRD. Thank you. The other thing I would hope you will consider is, one of the things we see is communities that have actually played by the rules and spent the money sometimes being penalized because they have put the output out, and then someone who delayed, needed upgrades, gets more funding down the road. And it seems kind of an inequity that I hope we can address.
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Mr. FOX. I would say, too, in the next panel you will have a witness who is a member of the Invasive Species Task Force and can probably answer your zebra mussels questions quite accurately.
Mr. BAIRD. Terrific. I am raising it every chance I get because I doubt that I can run for re-election on the notion that I saved you from the zebra mussel, but, by God, maybe we should be able to.
Mr. Fields, on the issue of toxics cleanups, we have a community that literally stopped by this morning to see me where they have a very significant problem with pentachlorophenol, hundreds of thousands of gallons of pure penta sitting on the top of their aquifer. And they said, Please help us get some funding, but please, God, don't make this a Superfund site.
We have got a problem here if the very vehicle that is designed to help us clean up Superfund sites is not conducive to helping folks do that.
I was reading in your budget proposal that you have these pilot proposals or pilot programs. Can you tell us a little bit about these pilot programs and how that might help, say, a community here who doesn't necessarily want to be a Superfund site, would prefer to have State-level control, but needs the Federal funding to help that?
Mr. FIELDS. I don't know the specifics regarding this particular site, but if it does qualify—if the levels of pentachlorophenol are high enough—and we do this at hundreds of sites around the country—we can come out there and do a removal action. We don't have to necessarily make it a Superfund site, but rather we can take the appropriate response action to at least address the major threat that is being caused by the site in your community. So that is one thing we could offer, and we could work with the appropriate people to see if the site would qualify to take emergency response action to deal with the contaminant there.
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In terms of the pilot program, the Administrator announced this new pilot program for Superfund redevelopment last July, and this program would allow us to provide funding for assistance in reuse and redevelopment of contaminated property once cleanup is done. It does not have to be property that is on the Superfund list. We are doing this also at some sites that have contamination but can be cleaned up and the land can, therefore, be redeveloped.
Grants in this program are competitive. The applications are due in March, and we hope to award 50 new pilot projects by the end of calendar year 2000.
Mr. BAIRD. Can you give us a sense of the funding that those involve?
Mr. FIELDS. The funding would go to $200,000. That is not cleanup money. That is strictly money to help the local government, provide assistance to them in reuse and redevelopment planning.
Mr. BAIRD. We need some cleanup money, is what we need.
Mr. FIELDS. Well, for cleanup, like I said, you have a Superfund removal action, you have the possibility, as we are trying to do in Portland Harbor with Congressman Blumenauer, of State deferral. We have several other options that don't necessarily have to result in a Superfund designation.
But one thing I want to point out: Superfund designation does not mean redevelopment or reuse cannot occur. Of the Superfund sites that we have had over the last 19 years, more than 170 of those, roughly 1,300 sites have had major reuse and redevelopment. And they have been on the Superfund list.
And so we are not finding that Superfund designation necessarily means that reuse and redevelopment—economic, ecological, and recreational—cannot occur.
Mr. BAIRD. Well, we will work with your office on this. Thank you very much.
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Mr. FIELDS. Thank you.
Mr. BAIRD. Thanks, Mr. Chairman.
Mr. EHLERS. [Presiding.] The gentleman's time has expired. I would just observe that we have a new Superfund bill in process, and if that passes, that will help your community tremendously.
The gentleman from Ohio, Mr. LaTourette.
Mr. LATOURETTE. Thank you, Mr. Chairman. And I want to begin by thanking both the Corps and the U.S. EPA for their able partnership with the river partnership in my part of the world, which I think is being used all around the country as an example of how to keep something off the Superfund list and engaging all the stakeholders in a positive way.
I also want to thank your agencies, Mr. Fox as did Mr. Ehlers, for the $50 million for dealing with our contaminated sediments problem in the Great Lakes. I would note—and as I understood in Mr. Ehlers' question about this, taking a look at the 31 hot spots or areas of concern in the Great Lakes, and I think you will agree with me that that is sort of a drop in the bucket, even if you leverage the additional $30 million match, you have 80. I know a group of Great Lakes environmental groups got together and said we should do one harbor really good and maybe have 30 that will wait in line as opposed to doing 31 crappy. I think that is the challenge, and I hope you take a look at that.
I am also glad that you cleared up with Mr. Ehlers that this had nothing to do with the Vice President's Presidential campaign. We were a little concerned in our office when we called Region 5 and they said we had to get our information from the Vice President. But I guess it was a coincidence.
In your remarks, Mr. Fox, you talked about the Federal-State partnership, and I am not going to talk about the SRF, but I want to talk about something that Mr. Pascrell and I did last week. If I were the State partner in this partnership, I would quit, because, quite frankly, when it comes to clean water, over 90 percent of the cost is now being borne by the locals. And I don't say that that is anybody's fault. It is not the Administration's fault. It is not Congress' fault. But it is, in fact, what is going on.
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Just to give you an example, part of Ohio that I don't represent—it is over in Congressman Kucinich's district, but they used to charge in a place called Parma, Ohio—Parma, Ohio, is kind of famous because when Cleveland was a joke, they used to say that they all bowled over there and ate kielbasa and pierogies and wore white socks. But you could build a house in Parma, Ohio, in 1992 and pay a $32 tap-in fee. In 1992, because of the clean water requirements that then followed, 2,500 bucks. That is a 7,000 percent increase.
And what we are finding in our part of the country—and I don't think it is unique—you have these fights—you know, Mr. Baird brought up the rural areas, but now what you have—you used to use tax abatements to lure businesses and jobs from one community to another. Well, now they are doing the same thing with tap-in fees.
There is a story about a dairy company that was going to locate in Hagerstown, Maryland, close by, but that the tap-in fee was $900,000, and so they decided to go to Virginia instead with 170 jobs. I guess now politics has gone into the sewer, because, you know, if you are a city manager or a mayor, you can cut a deal on a sewer tap-in fee and take jobs away from Vern Ehlers or Steve Horn or anybody else, or Sherry Boehlert.
Anyway, Pascrell and I got together last week, and I would hope that, in addition to the arguments that you already heard about the SRF, we introduced a bill called the Urban Wet Weather Priorities Act of 2000, which would reinitiate a grants program. And from your comments when you were talking to Mr. Baird, I understood you to say that we have to be creative and not only look at low-interest loans, which the SRF thinks about, but no-interest loans and maybe, God forbid, going back to grants.
And so I am going to leave this hearing today saying that the U.S. EPA has endorsed Mr. Pascrell's bill and mine, and I am very happy about it. But I am wondering why is it that the EPA isn't looking at clean water grant funding or direct means of Federal assistance to give these communities—and it doesn't matter to me whether it is rural, suburban, urban. Why don't we go back to the old days of free money, and why aren't you looking at that?
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Mr. FOX. Again, you will have no disagreement from us on the needs, and bear with me here a second on the history, and I don't want this to come out partisan. It isn't that intent at all.
When the Reagan Administration came, they thought that the right policy was to get the Federal Government out of the business of wastewater, and this Congress enacted the 1987 amendments to the Clean Water Act that envisioned a day in 1994 where there would be zero Federal involvement in this problem. And I think all of us today understand that there has to be a continuing Federal responsibility as part of this.
I have seen the data on the Ohio communities. It is actually some of the better data that we have around the country, and it does suggest that many communities are exceeding their ability to pay for some of these water and sewer problems. So I truly think this is one of the most important national problems that we are facing today.
On the subject of additional flexibility in grants, before you walk away feeling that we, in fact, are supporting your bill—and we will be happy to take a look at it—I think the challenge is going to be structuring a financial package so that we are not giving away all of the money. I am not going to say that there aren't some communities that would benefit by, what I will use the term, principal forgiveness because it is in much more of a context of a longer-term commitment but financially it is the same as a grant.
If Congress were to authorize an SRF at a very high level, it is going to give a lot more flexibility to the States to give money out at lower interest rates or in some cases principal forgiveness. And I think that is the area that we need to be talking about for the future.
Mr. LATOURETTE. I agree, and if I can beg the Chairman's indulgence, this infiltration problem is just killing us in our part of the country. We don't have new development, but this 90-year-old sewer system that has the wastewater together with the storm overflow with the sanitary, are dying. And we need some relief, and I hope—I know you didn't endorse my bill, but I will wait for the letter to come in the mail.
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Thank you very much.
Mr. BOEHLERT. [Presiding.] Thank you very much, Mr. LaTourette. Let me observe that this is a love-in compared to the meeting I just left, which is very much in session, with Secretary Richardson and about 40 screaming Members of Congress dealing with the crisis and the cost of home heating fuel and diesel fuel. It is crippling a part of our Nation, and he is in the hot seat right now. For you guys, it is easy.
Mr. Blumenauer? I will have a couple of questions, but you had a comment.
Mr. BLUMENAUER. Please. Thank you, Mr. Chairman.
First, I would ask that the series of questions on behalf of Ms. Tauscher be submitted to the witnesses and that their answers appear in writing as part of the record.
Mr. BOEHLERT. Without objection, so ordered. And there will be other questions that we will follow up with in writing, and we would hope we would get a timely response.
Mr. BLUMENAUER. With your permission, Mr. Chairman, a very brief comment and one follow-up question for clarification from the witness. I, too, am intrigued with the possibility of the Federal Government playing a larger role in some of the 1,100 communities that have combined sewer overflow. Some of us didn't buy in to the balanced budget agreement and some of the budget caps that were unrealistic because they put everybody, Administration and Congress, into an odd situation in terms of doing things that are unrealistic.
Thank you for your indulgence, Mr. Chairman.
The one question that I had that I wanted to redirect towards Mr. Westphal, there was an earlier exchange about whether or not the Corps had recommended projects without a completed chief's report in the past. Could you clarify whether or not the Corps had recommended projects without a completed chief's report in the past, and whether or not there are instances where such a recommendation might be appropriate in the future?
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Dr. WESTPHAL. One good example of that is a place I was recently at a couple of weeks ago, Grand Forks, North Dakota, where we did have to do that because it was a very serious emergency. And we just signed a project cooperation agreement to do that flood control project. It was a terribly devastating flood. So there is a precedent for doing that, and that is one particular example where the Administration went forward on that.
Another example where that may occur, too, of course, is with some of the Florida Everglades restoration projects. But in that case, I have to say that there is so much work that has been done, so much science, so much research to date that we have pretty much everything we need up to now to go forward with those projects. And the time line is so tight that that is another area where it may be feasible to go forward ahead of what would be a completely full-fledged feasibility study.
Overall, my remarks were simply to say that in the general scheme of things, it is a good idea to wait for those reports.
Mr. BLUMENAUER. Thank you for the clarification.
Mr. BOEHLERT. Thank you very much.
Mr. Fox, two questions. One, would EPA support the provision of funds for the clean lakes program, either as part of the Section 319 program or as a component of the SRF? And the second part is: How much Clean Water Act funding is currently going toward acidified lakes and coastal waters?
Mr. FOX. If I could answer the second part of your question for the record to make sure I do a complete scrub of the dollars.
Our position in general has been that the Section 319 program offers ample flexibility for States to make decisions about funding lake priorities. As I testified to, the Section 319 account was at $50 million in 1993. If we succeed with this budget, it will be at $250 million. That is a sizable investment that States can make their own decisions about whether that money should go to a lake, a stream, or a river. And I think that that discretion should be left to the Governor.
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Mr. BOEHLERT. And the second part you will provide that for the record.
Mr. FOX. Yes.
Mr. BOEHLERT. Now, Mr. Fields, in your testimony you state that EPA will not be able to reach its goal of completing construction of 85 remedies at Superfund sites in fiscal year 2001 because EPA received an appropriation of only $1.4 billion for the Superfund program instead of $1.5 billion in the current fiscal year.
On Monday, we received the President's proposed budget for 2001. These budget documents show that at the end of fiscal year 1999, the EPA Superfund program had $495 million available that was not obligated and was carried over. The budget documents show that this carryover and the other new budget authority, that EPA actually has $2.095 billion available for obligation in 2000, which is an increase, according to my math, of $330 million from actual obligations in 1999. And let me follow through on this.
I also understand from CBO that EPA has an additional $90 million that it can deobligate from expired contracts and then spend on new obligations. This also will increase the money that EPA has available for the Superfund program in fiscal year 2000.
First of all, are these numbers correct? And if so, with these resources, why would EPA be unable to meet its goal of 85 construction completions in 2001? Based on the numbers that I have, the Superfund program could increase cleanup funding, not decrease it. The $90 million deobligation funds alone would almost bring you back to the fiscal year 1999 levels.
Did you follow all that?
Mr. FIELDS. Yes.
Mr. BOEHLERT. It is a detailed question with some very specific numbers, and we are using the Administration's budget document. The Honorable Mr. Fields.
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Mr. FIELDS. Two sets of questions. I will be very brief. One concerns the 85 construction completion target, which we have achieved each of the last 3 years. The reason that we are going to fall short on that in fiscal year 2001—and we say we will achieve 75 construction completions in that year, next year—is because we will be unable to start roughly 15 construction starts in fiscal year 2000 because we are short on the budget by roughly $100 million. And I will explain why.
The typical construction phase is 2 years. If we don't start those 15 projects in fiscal year 2000, we will not be able to complete them in fiscal year 2001—that is why we believe that we will fall short of our 85 construction completion target in 2001. You have to start the money in one year in order to finish it the second year. The construction phase typically takes 2 or more years to get that done.
Regarding the data you point to in the appendix, that data is accurate. Roughly $2.095 billion is available for fiscal year 2001. But let me explain that in fiscal year 2000, this year, roughly $1.6 to $1.7 billion. That reflects the $1.4 billion budget that Congress has given us, plus an additional amount of money that we will get from carryover funding, which is typically $100 to $150 million each year. Another $300 million is there for cash-outs and Superfund State contracts that we are going to deobligate money from.
That money in the cash-out and Superfund State contract category has to be given back to specific sites that money is being deobligated for. So even though the $2 billion is, 'available,' some of that money will be unable to be spent because the project is not ready until 2001, 2002, or some subsequent year.
We believe, just based on how much we can actually push through the system in the way of deobligations and cash-outs and Superfund State contracts, that we will obligate between $1.6 billion and $1.7 billion of the $2.095 that is 'available.' That document is developed based on accounting principles that provide an accurate picture of the total amount of dollars that are available. Not all that money, though, Mr. Chairman, can actually be spent or obligated in fiscal year 2000. Some of that money will carry over into fiscal year 2001 and fiscal year 2002.
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The Office of Management and Budget and EPA together had to show the total amount of money that is available in fiscal year 2000, but not all that money can actually physically be spent because we just can't get the deobligations, the cash-outs, and all the financial instruments done and reobligate that money site specifically during 2000. Some of that money will be obligated. We estimate that of the total amount of that money you see there, the $2.1 billion, roughly up to $1.7 billion will actually be obligated in 2000. Some other parts, roughly $400 million of that, will be obligated in subsequent years, 2001 and 2002.
And the last point: The $1.45 billion budget that the President is requesting for fiscal year 2001, that was presented to Congress and requested with that amount of carryover that we will be getting in 2001 in mind. That was all considered when we made our budget submission. We always assume in preparing our budget submissions a certain amount of dollars for cash-outs, for Superfund State contract deobligations, and carryover funding from previous years. That is part of our budget assumption, and it is included in the $1.45 billion budget request.
Mr. BOEHLERT. Thank you for a very comprehensive answer, and I will be anxious to reread the transcript.
[Laughter.]
Mr. BOEHLERT. But if I am correct in understanding this, you have over $2 billion that you could obligate, but because of some internal mechanism or difficulties, you are not going to be able to spend it all. Is that correct?
Mr. FIELDS. In the current year. In fiscal year 2000, we will be able to spend roughly $1.7 billion of that total amount. The other money will be spent in subsequent years.
Mr. BOEHLERT. So Congress isn't guilty of shortchanging you on this program to meet the goal of 85 construction completions?
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Mr. FIELDS. Congress is impacting our ability to meet the 85 goal in 2001. We are $100 million short—we had counted on $1.5 billion being given to us in budget authority for fiscal year 2000—we are being given $1.4 billion. That $100 million shortfall is going to impact our ability to start at least 15 construction starts that we will not be able to complete, therefore, in fiscal year 2001.
Mr. BOEHLERT. Wouldn't management lead one to conclude that your projections should have forecast that you would have some money available for deobligations on the one hand and some carryover of $400-some-odd million on the other hand? I don't mean to be contentious, but it seems to me, the untutored mind up here, that you have got—you are saying in your testimony— you have got over $2 billion for obligation, and you need $1.7 billion. To me you got more than you need.
Mr. FIELDS. Well, like I said, Mr. Chairman it is just how much you can push through the system. Deobligations, being very aggressive about that, you know, we can only get through the system a certain amount in each year. We have about $120 million in carryover. We will have roughly $150 million in deobligations. That is money that we typically have each year, and that is assumed when we submit our budget request to Congress of roughly $1.5 billion a year, as we have for the last 4 years. Those carryover dollars, those cash-outs, that money is all part of our assumptions. But the $100 million hit that we are taking in fiscal year 2000 is impacting our ability to start new construction starts this year, I assure you, and, therefore, we don't believe we can do any more than 75 construction completions in 2001.
We are committed to the target in fiscal year 2000.
Mr. BOEHLERT. I think we have probably exhausted that for the time being. My red light is on. I want to get to Dr. Ehlers in a minute. And we will be very carefully following this in the transcript and getting back to you to be certain we understand what we are talking about.
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Mr. FIELDS. Yes. And I just would like to inform you that, Mr. Chairman, we will give you in writing—and I will work this with the Office of Management and Budget—a formal explanation of how that $2.095 billion equates into obligations in the current year and subsequent years in the Superfund program.
Mr. BOEHLERT. Once again, let me apologize for having to be away with that other meeting, but did you say anything about endorsing H.R. 1300 in my absence?
Mr. FIELDS. We applaud your efforts on H.R. 1300 and the tremendous support you have gotten from this committee, and all the folks who have endorsed your bill and signed on to your bill Mr. Chairman. However, we in the Administration believe that the best way to go here is to develop a bill that both the Administration and the Congress can all agree on.
We have some concerns, as you know. We have talked a lot with you and your staff about H.R. 1300. We believe that, after 7 years of all of us trying very hard with your great leadership, the best way to go here is for all of us to sit down together and talk about those things that the Administration and Congress can agree on. Let's develop that list of those items that we all agree on and pass legislation that the President will sign.
I think we are not going to get there if we continue to have debates about those things or those elements of Superfund reform that the Administration, who is charged with implementing the program day to day, either does not believe we need or we have strong disagreement with. I don't think we are going to get there that way. So I would recommend we all come together on those things we agree on, liability relief for certain parties, targeted brownfields legislation, and then go on and pass that.
That is my suggestion to this committee.
Mr. BOEHLERT. I am sure you can appreciate my frustration over the fact that some of the things that the Administration is questioning is word for word legislation advanced by the Administration. And I thought that was a great accommodation from the Chair, and a number of us up here did, too, on a bipartisan basis because, quite frankly, we are not the source of all wisdom. And you guys have the daily responsibility for administering these programs, and I have been among those applauding much of what you do.
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So this is not an adversarial relationship, but I have been frustrated over certain objections that have been advanced of late and certain portions of the proposal, only to find out word for word it came from the Administration. We will talk about that some more.
Dr. Ehlers, you are recognized.
Mr. EHLERS. Thank you, Mr. Chairman. And I do want you to know that I endorsed your bill in your absence.
Mr. BOEHLERT. So did 67 other Republicans and Democrats on this committee.
Mr. EHLERS. Yes, I know, and I think Mr. Baird now realizes the wisdom of it, too.
Because the interchange with Mr. Fox was ended prematurely earlier, just to clarify, I strongly support the Great Lakes Initiative, or whatever name we end up giving it. My questions about the funding were not intended just to be critical of you and OMB for their choices but, rather, because I know it will not pass in that form. It will not get through the Congress.
I will be working to identify sources of funding that we can get through the Congress so that we can make this initiative work. And I will be happy to work with you on that and try to get this implemented into law.
Thank you very much, and I thank you, Mr. Chairman.
Mr. BOEHLERT. Thank you very much, and I thank all of you for participating in this endurance contest. Mr. Fox, Mr. Fields, you are indeed honorable, as is Dr. Westphal.
Mr. FIELDS. Thank you, Mr. Chairman.
Mr. FOX. We will see you tomorrow.
Mr. BOEHLERT. Thank you very much. Yes, Chuck, I look forward to it.
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Now to our final panel of the day which consists of Dr. Kate Jackson who is the Executive Vice President of Resource Group for the Tennessee Valley Authority, and Mr. David N. Smith, Chief Financial Officer; for the Natural Resources Conservation Service, Danny D. Sells, Associate Chief; and representing the National Oceanic and Atmospheric Administration, we have the Deputy Assistant Secretary, Ms. Sally Yozell.
All of the statements will be included in the record at their entirety at this juncture. We would ask that all of our witnesses be mindful of the time and try to summarize your overall statement. The Chair is not going to be arbitrary in adhering to the 5-minute rule, which some committees stick to in a very arbitrary manner. I don't. I think the matter is too important to limit it to 5 minutes, although I would appreciate your sort of flirting with that 5-minute limitation.
With that, let me first recognize Dr. Jackson.
Will Mr. Smith also have a statement?
Ms. JACKSON. In fact, David will go first.
Mr. BOEHLERT. All right. Mr. Smith?
TESTIMONY OF DAVID N. SMITH, CHIEF FINANCIAL OFFICER, AND DR. KATHRYN J. JACKSON, EXECUTIVE VICE PRESIDENT AND ENVIRONMENTAL EXECUTIVE, TENNESSEE VALLEY AUTHORITY, KNOXVILLE, TENNESSEE; DANNY D. SELLS, ASSOCIATE CHIEF, NATURAL RESOURCES CONSERVATION SERVICE, U.S. DEPARTMENT OF AGRICULTURE; AND SALLY YOZELL, DEPUTY ASSISTANT SECRETARY, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE
Mr. SMITH. Good afternoon, Mr. Chairman and members of the subcommittee. I am honored to be here this afternoon and pleased to have an opportunity to give you an update on the financial and operating conditions of the TVA.
1999 was a very good year for TVA, and more importantly, it was a very good year for the people in the businesses of the Tennessee Valley. By supplying one of the basic ingredients of growth, that is, electric power, TVA continues as a key partner in generating regional prosperity.
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TVA's commitment to providing a reliable supply of power to the Tennessee Valley was tested last summer when we were called upon to meet demand that exceed on 16 occasions, the record demand of the prior year, and TVA met each of these challenges reflecting our commitment to maintenance and modernization of our system.
The performance of TVA's nuclear plants has continued to improve, and it is now recognized nationally as outstanding. TVA's newest nuclear facility, the Watts Bar nuclear plant, recently received the highest possible plant rating from the Institute of Nuclear Power Operators. TVA now currently is the only utility in the Nation holding three INPO number-one ratings.
Let me share some highlights of our financial performance. In fiscal 1999, TVA generated total revenues of more than $6.5 billion, continuing to sell energy at an average price of only a little over 4 pennies per kilowatt hour.
Interest continues to be our largest category of expense, but in contrast to 4 years ago when interest was $2 billion and accounted for 37 percent of our total budget, last year interest was reduced to $1.8 billion and accounted for only 27 percent of total revenues.
Our cash flow continues positive. So we again reduce the level of debt outstanding last year. Total debt reduction since 1997 now stands at $1.3 billion. This 3-year performance is in remarkable contrast to the previous 35 years when debt increased every single year.
TVA enjoys an excellent reputation in the financial markets. We are supported today by 307,000 investors from all 50 States and 35 countries around the world.
As this subcommittee knows, in 1997, TVA prepared a 10-year business plan designed to ensure that TVA would continue to remain competitive in a structured utility market of the future. Now, as with any plans, events occur which impact original projections and require changes in strategy.
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Fortunately, some changes are positive. For example, since 1997, our region of the Nation has seen even stronger growth than we anticipated, and interest rates have been lower than our assumptions.
On the other hand, higher investments in pollution control equipment and additional monies for peak and capacity will consumer dollars today that were otherwise targeted to debt reduction. We continually monitor the changing landscape of the utility industry, and we update our strategies as appropriate.
For TVA, producing electricity has always been a means to a much greater end. We continue to be an advocate for the public good, trying to ensure that the benefits of the utility industry restructuring are shared by all of the valley consumers, and we also continue to be a steward of the environment, preserving and protecting the natural resources with which our region has been so abundantly blessed.
I thank you very much for the opportunity to address you today and share our optimistic view for the future of TVA.
Dr. Jackson?
Ms. JACKSON. As David described, TVA's service as a public power agency remains constant because TVA was created to serve the public interest. The integrated resource management model that is the heart of TVA's flood control navigation and electric generation system works because of TVA's single point of governance for the Tennessee River watershed, and it will continue to serve the public interest and protect the watershed resources as long as the system is operated by the Federal Government in the national interest and under the continued oversight of this subcommittee.
Of primary interest to the subcommittee may be the current disposition of the land between the lakes, national recreation area. LBL was transferred to the U.S. Forest Service in 1999 by action of the Appropriations Subcommittee on Energy and Water Development, and since October, we have been working very closely with the Region 8 Forest Service Office to make sure that there is a smoother transition of both operations and employees.
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Even without federally appropriated funds for fiscal year 2000, I want to stress to the subcommittee today that TVA's commitment to the traditional resource stewardship activities has not wavered. In fact, TVA's investment of power revenues in these activities has increased from $29 million in 1999 to $70 million this year, and ratepayer revenue is budgeted to go to $71 million in 2001. Adding in projected user fees, the total for stewardship expenditures and investments for 2001 will be about $74 million.
Of great concern to the subcommittee may be the status of the Chickamauga Lock. As you are aware, TVA is working closely with the Army Corps of Engineers to provide the expertise they require to complete the feasibility study for Chickamauga Lock which is located near Chattanooga, Tennessee. The 60-year-old lock is plagued with concrete growth. Structural deformation is aggressive and will within 10 years cause the lock gates to malfunction.
Previous TVA studies have indicated the closure would cost the region and the inland waterway system 318 miles of navigatable channel. $30 million annually in chipper savings would be forfeited, adding thousands of additional trucks to an already overcrowded interstate highway system, and it would deny the defense facilities at Oak Ridge the shipment of oversized cargo that is critical to their unique research and development role.
We will continue to work with the Corps, the committee, and our congressional delegation to find a viable solution for the lock.
In closing, last year the National Recreation Lake Study Commission submitted its report to Congress. As TVA's representative on the commission, I traveled to regions throughout the country to hear firsthand from representatives of hydropower irrigation water quality and recreation interests.
The testimony of those from regions outside the Tennessee River watershed offered me new insight on how other major river systems and the Federal dams on them are managed. The experienced underscored for me the distinctions between TVA's integrated river system and the dam-by-dam authorizing history of those operated by other Federal agencies.
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I am pleased to report I couldn't find another river management system that optimizes water resources at a commensurate level of multiple benefits for local citizens and national interest.
TVA's system was designed to unite economic development objectives across State and local boundaries based on topography of the watershed. There are tradeoffs among users to be sure, but overall I found that the flexible authorities and integrated asset management of TVA ensures working balance among competing interest that is unmatched in other regions.
Once again, David Smith and I thank you for our invitation to testify today.
Mr. BOEHLERT. Thank you very much.
Mr. Sells?
Mr. SELLS. Thank you, Mr. Chairman.
Mr. Chairman and members of the subcommittee, thank you for the opportunity to appear again and discuss the watershed activities of the National Resources Conservation Service. As you know, our agency has had a busy year, and we have a full plate ahead as well.
Mr. Chairman, we are seeing a real change in how we view the landscape and how it is used. It was best summarized by Secretary Glickman a few days ago who noted that more than traditional commodities, our Nation's farmers and ranchers provide and preserve healthy soil and clean water. Both of these commodities add quality to our lives.
We at NRCS are proud of our accomplishments in this area, and I am pleased to report that the 2001 budget submission contains many opportunities for us to make further substantial improvements in the Nation's national resources.
The Administration's FY2001 budget proposes funding for the watershed and flood prevention operations at $83.4 million, which is the level recommended in last year's budget request. The program has been very popular among communities, and we have a backlog of about $1.38 billion in the program.
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Unfortunately, with the large backlog, the waiting time to get projects on the ground has been prolonged. As a result, we will continue to focus funds on the most cost-effective and environmentally beneficial projects.
The funding request for FY2001 also includes a new loan program to assist communities who have aging dams that may pose significant safety risk. Last year, this committee approved H.R. 728 which would provide NRCS authority to rehabilitate aging structures, and that legislation is awaiting floor action.
This year, approximately 1,200 structures will require significant restoration at an estimated cumulative cost of $454 million. As a result, the President's budget proposes the use of $4 million in subsidy budget authority for a new $60-million loan program that would provide loans to State and local governments for the rehabilitation of those aging dams.
Additionally for FY2001, we have asked Congress to appropriate for the watershed surveys and planning, $10.4 million, also the same level as FY2000.
I would like to take an opportunity to point out that none of the work we have accomplished nor the challenges we face can be met without the expertise, hard work, and dedication of the NRCS employees that are our field delivery system.
Additionally, the President's budget contains several provisions aimed an improving the quality of water across the Nation's private lands. The package includes expansion of the Farm Bill Conservation Program such as the Environmental Quality Incentives Program, the Wetlands Reserve Program, conservation buffers, the Farmland Protection Program and others, which have been very successful and they are in great demand around the country.
The budget also proposes a new conservation security program. This program would provide $600 million paid directly to farmers for conservation practices already installed which improve soil and water quality, recognizing the value of these nontraditional commodities.
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As the Clean Water Action Plan was being developed between NRCS and EPA, many farmers said that we were putting the regulatory cart before the horse. Mr. Chairman, the package contained in the Administration's 2001 budget is a horse that we can all hitch a wagon to. Farmers and ranchers must have the needy tools to help them be better stewards of the land and water. This initiative can provide those tools.
Programs like the Small Watershed Program and the proposed increases in the FY2001 budget will help farmers and ranchers across the country improve water quality and quantity. We have had many significant accomplishments in the Small Watershed Program over the past 5 decades, and many parts of America are better off as a result, but there is still much to do.
I thank the committee and would be happy to take any questions you might have.
Mr. BOEHLERT. Thank you very much.
Ms. Yozell?
Ms. YOZELL. Thank you, Mr. Chairman, good afternoon, and members of the subcommittee. My name is Sally Yozell, and I am the Deputy Assistant Secretary of the National Oceanic and Atmospheric Administration at the Department of Commerce. Thank you for the opportunity to testify today on our FY2001 budget and programs within the jurisdiction of this subcommittee.
Today, I will highlight the NOAA programs which fulfill our trust responsibilities for coastal resources and several federally related statutes, and those related to the Control Pollution Prevention Control Program. I am going to add to my testimony today a few issues on invasive species which I will get to at the end.
As you know, Federal officials have been designated by the President as trustees for natural resources. The Secretary of Commerce is responsible for protecting and restoring the coastal and marine resources. NOAA has two highly effective programs for fulfilling our responsibility, the Coastal Protection and Restoration Program and the Damage Assessment and Restoration Program, which are a joint effort by the National Ocean Service's Damage Assessment Center and the National Marine Fisheries Service Restoration Center.
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In the past decade, a total of $25 million has been appropriated for the DARP program. This has enabled the program and its partners to secure more than $260 million in restoration funding for injured natural resources from those responsible for the harm.
The President's budget requests an increase of $1.7 million for a total of $3.2 million for the restoration center. This will expedite implementation of restoration, ensure the long-term efficacy of existing restoration, and help local communities restore coastal resources.
While the DARP program has generated significant funding for responsible parties to conduct coastal restoration, base restoration center funding is essential to implementing these restoration activities.
The President's FY2001 request requests the damage assessment center to be funded at base level of $5.1 million. This will sustain ongoing efforts to assess injuries and assess restoration of our coastal resources, and this request will also support existing partnerships with States and other trustees.
The President's budget also requests an additional $500,000 for the Coastal Protection and Restoration Program to return the program to its previous funded level of $1 million. This program, as you know, works within the remedial process of hazardous waste sites with EPA to protect NOAA's trust resources. The result of NOAA's involvement at approximately 260 sites per year has been cleaner coastal habitats which support billions of dollars of tourism, recreation, and commercial fishing.
This small $500,000 investment will enable NOAA to expand its program beyond just focusing on EPA's Superfund sites. By doing this, we will be able to share our technical expertise and assist both States, localities, and other Federal agencies in responding to coastal hazard site remediation.
The minimal investment in these three NOAA programs has created enormous benefits such as better protection and restoration of our coastal resources, increased incentives for responsible behavior, and obviously advances in science.
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Let me quickly turn to the coastal nonpoint program. Polluted runoff is the number-one pollutant contributing to the decline of our coastal waters, and, Mr. Boehlert, you have been very helpful to us over the years and I want to thank you.
This decline is seriously impacting our coastal habitat. However, polluted runoff impacts more than just the environment. We are seeing that it is impacting our coastal economies through losses of seafood sales, tourism, and coastal recreation.
Established by amendments to the Coastal Zone Management Act in 1990, the coastal nonpoint program, known well here as the 6217 program, brings together the forces of Federal and State programs to control polluted runoff.
NOAA jointly administers this program with EPA, providing a marriage of coastal water expertise at the Federal and State levels.
It has been 10 years since Congress established this program, and most coastal States have developed plans outlining what needs to be done to solve their coastal polluted runoff problems.
As you well know, the process has not always been an easy one, but NOAA and EPA have worked cooperatively with the States affording them flexibility needed to design programs that accommodate their differences while meeting necessary Federal requirements.
I am pleased to say that just this past December, I went to Maryland where we issued our first full program approval. Soon, we anticipate the States of California and Rhode Island will be having full approval, and we look forward to the other States in the coming year.
We anticipate that several of the other programs that are new coastal zone programs, Texas, Ohio, and Georgia, will be working using the money that we have provided in our funding request to develop their programs, and our funding request for the 6217 is an increase of $2 million to bring the total up to $4.5 million.
Before I conclude, though, let me tell you that in our budget, we do have in our Sea Grant program $3 million that is set aside to address aquatic nuisance species, and in addition, we have another million dollars which is a $200,000 increase for the Aquatic Nuisance Species Task Force that comes under the National Invasive Species Act which is this committee's responsibility.
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I co-chair the Aquatic Nuisance Species Task Force, and what these funds are really focussed on are prevention, control, research, education, and outreach. The 100th meridian project, which you mentioned earlier, is one that the task force is taking very seriously. We are working with the Western Governors Association. We recognize the costly consequences of zebra mussels and obviously other aquatic nuisance species.
As Mr. LaTourette and Mr. Ehlers, if they were still here, could attest to, it is very costly, and we are doing what we can to ensure that they do not move to the West Coast.
Mr. BOEHLERT. Thank you very much.
Since you are last up, let me give you first opportunity in terms of the question period.
The new $100-million coastal impact assistance fund, is that intended to address nonpoint pollution exclusively, or is it more comprehensive in its targeting?
And let me ask you as to projects from the new impact fund. Do they have to be part of a State's approved coastal zone management plan?
Ms. YOZELL. The Coastal impact assistance program is a $100-million request in our Lands Legacy Initiative, and really, the overall Lands Legacy Initiative, which is a $265-million increase in our programs, is in many sense a mirror of the OCS legislation that is currently moving through the House and the Senate.
The Ocean Impact Assistance Fund, per se, is a fund for those States that have OCS activity off of their shores, and there are seven States. The fund will be designed to mitigate the environmental impacts that occur with the outer continental shelf oil and gas activities. If a State chose or wanted it to be for polluted runoff, it could be, but there is a long list of activities that I think a State might choose, but let me focus on another part of our Lands Legacy Initiative, which is the large increase in the coastal zone management program. We have identified $25 million of our basic State grants which are the Section 306 and 309 grants and targeted this $25 million to be used by States to address polluted runoff.
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Yes, they must all accommodate and follow their coastal zone management-approved programs.
Mr. BOEHLERT. Thank you very much.
Dr. Jackson, first off, an easy one. The transition to LBL, how is it going? Is it running as smoothly as you hoped, as we hoped? Any particular glitches?
Ms. JACKSON. Yes. No, I think it is running smoothly. We will not really have a good feel for that until the facility is open next month.
Mr. BOEHLERT. Sure. It is kind of early, I know, but you don't see any real problems.
Ms. JACKSON. No.
Mr. BOEHLERT. Is that your final answer?
[Laughter.]
Ms. JACKSON. Yes.
Mr. BOEHLERT. It shows you on occasion, I even get caught watching that.
Last November, EPA issued a compliance order against TVA claiming that TVA violated Clean Air Act new source review requirements at 10 of your coal-fired powerplants. Now I understand TVA is contesting this compliance order. What are you contesting, and what is the status of the ongoing negotiations between you and EPA? What is your goal for the negotiations? This is something near and dear to my heart.
Ms. JACKSON. It is near and dear to our hearts, too.
In fact, we believe that the goal that we have is very similar and aligned with the goal that EPA has which is to ensure that air quality continues to improve in our region and in the Nation as a whole.
We have been working with the other utilities, the investor-owned utilities that are involved in the action, and we have been discussing with EPA how we can resolve this issue favorably.
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Our goal is to ensure that we are able to continue to operate the system reliably, and that we can invest in pollution control equipment that is appropriate, that gets the most environmental bang for the buck, so that we can do the very best thing for our ratepayers, but also for the health of the region.
In fact, even before there have been laws on NOx. We have voluntarily come out and committed between 5- and $600 million to install SCR selective catalytic reduction equipment at 10 of our units in the region, notwithstanding any of the issues, recognizing that we want very much to step out and take a leadership role and make sure that we are dealing with environmental issues soundly.
Mr. BOEHLERT. Worthy objective.
Mr. Clement?
Mr. CLEMENT. Thank you, Mr. Chairman. Good to have all of the members of the panel here today.
Mr. Smith, as you know, you and Dr. Jackson more than anyone have worked very hard, were very successful and been able to work it out whereby the TVA could refinance its debt that we had with the Treasury, and we have saved as much as $100 million a year.
Now we have an opportunity to accelerate those debt payments, and I want you to expand on that because we want to bring down that debt as rapidly as we possibly can because all of us know one of these days Congress is going to move forward with electricity deregulation, which I think a lot of you know is larger than airline deregulation, trucking deregulation, and telecommunications, all combined.
Mr. SMITH. I think you know that we share your objective in terms of paying down the debt rapidly. That was one of the principal strategies in the 1997 long-term plan that we put out. That plan that we put out in 1997 was also addressing the principal event that you referred to, and that was the ultimate future deregulation of our industry, and the objective was quite simply to make sure that TVA when that unfolded was in a position to be a competitive participant and be able to sell power at a competitive rate.
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One of the biggest strategies to achieve that goal of a competitive cost of power was to reduce the level of debt. We have made some, I think, remarkable progress in the past 2 or 3 years. We have paid it down, as I mentioned, in my remarks, $1.3 billion. We will probably pay it down another billion dollars between this year and next, but there are things that change as you march through time. There are other changes in strategies, and some of those, I have referred to in my written strategy.
We, against what we had in the plan, have opted to spend some money that otherwise would have gone for debt reduction. We have spent it for additional generating capacity, and we did that because one of the strategies laid out in the plan, which was to purchase power externally, is not necessarily a reliable strategy in periods of peak demand, and we are very, very sensitive to one of our primary missions to provide a reliable source of power to the people of the Tennessee Valley.
So we have made some changes in the strategy, but we do think that all those changes still will lead us toward the ultimate goal, which is a competitive cost of power, but just to reiterate, we do very much believe that reduction of the debt is one of our prime strategic objectives. We adhere to that.
Mr. CLEMENT. Dr. Jackson, I know the Chairman has already mentioned about clean air, and we want an environment that is safe and secure and clean. We realize what is occurring right now with the EPA's actions and all that. When do you expect some kind of resolution to this issue? Knowing that TVA is not the only polluter in the Tennessee Valley area, there are other companies, cars, et cetera, that pollute the air and water.
Ms. JACKSON. I think we simply do not know the answer to that question, and I think what is important for us is that we are not waiting for that. We have a viable pollution control strategy that we are implementing notwithstanding the issues on the EPA enforcement initiative. By 2005, we will have reduced our NOx emissions by 70 to 75 percent with the addition of these 10 selective catalytic reduction tools, and by 2005, we will have reduced by 80 percent our SO2 by 1976.
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In fact, I have some graphs that I would like to submit for the record if that is acceptable.
Mr. BOEHLERT. Without objection, so ordered.
Ms. JACKSON. So we are moving forward notwithstanding, although there will be some uncertainty that that will be left for some time, we feel.
Mr. CLEMENT. Dr. Jackson, also LBL, that is very precious to me like it is so many others. That is a national treasure. It is not just a local or regional treasure. I have been to Land Between the Lakes many, many times, and whether TVA manages it or some other Federal agency, it is something that we are very, very proud of. I know you have already commented about that.
Also, I want to comment that I know about Chickamauga Lock. We have got to solve that problem. The fact is, I have got to ask you because I do not know of an inland waterway system anywhere in the country where the power company is picking up the tab. TVA owns it, but whose responsibility is it when it comes to the Chickamauga Lock? When it comes to replacing it, we sure do not want to close it, and we want to extend the life of the Chickamauga Dam, but we also realize that that is interstate commerce. That is really important not only for the valley area, but for the whole country, the Chickamauga Lock to remain. I would like one of these days to see an entirely new lock that will serve all the river traffic for the entire country there.
Ms. JACKSON. We agree with you, and we very much appreciate the fact that this is a concern of this committee and of the Corps of the Engineers. And we are working jointly with the Corps to try to look for a resolution to this. The fact that it is in Tennessee maybe hides the fact that, as part of the inland waterways system, the Tennessee River provides lots of opportunity for movement of cargo in and out of all of the United States. We serve roughly 18 states to either be the source or the sink of that cargo that moves. So it is a critical inland waterways issue, and we are working hard with the Corps to find a solution to it.
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Mr. CLEMENT. And, also, I just want to comment on the power revenues that we are using for traditional resource stewardship. I don't know of an example anywhere in the country that that is taking place now. How much power revenues are we spending right now for those that are being paid for and being funneled through the Corps of Engineers in other parts of the country?
Ms. JACKSON. Last year we spent $29 million of power revenues, and this year we are spending roughly $70 million in ratepayer money. There are no taxpayer dollars being invested in the Valley whatsoever for the traditional resource stewardship activities.
Mr. CLEMENT. Thank you. And to our other panelists, great to have you here, and you are doing a good job and serving us well.
Mr. BOEHLERT. Thank you so much.
Mr. Baker?
Mr. BAKER. Thank you, Mr. Chairman. I appreciate your interest in calling this hearing.
Mr. Smith, I'd like to better understand some of the financial projections that the Authority is now making, and perhaps for frame of reference, return to an earlier time. We had a Government Agency study in 1995 indicating some concerns about financial structure, a response by the Authority about in 1997 to begin discussion of a 10-year plan to restructure, an update in 1999 by the GAO, which indicated that if the plan could work and there were some reservations about the effectiveness of the plan, that it needed immediate implementation, I am understanding that now either fully completed or near completion of the refinance of Treasury debt.
At the time of the GAO study, there were some estimates of what the potential annual savings might be from the restructure of about $160 million. Is that number still an accurate predictor of what the annual savings from the interest reduction might be?
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Mr. SMITH. That is a pretty good number, yes, sir.
Mr. BAKER. Given that, there was an initial estimate of the year 2007 by which the date of the Authority would be reduced by one-half. I am understanding that date has been modified. Can you now give me the accurate date by when you think the one-half debt reduction target can be met?
Mr. SMITH. Well, I am not sure, Mr. Congressman, I can give you the date by when it will be down one-half. Let me reiterate that our drive or our motive was to achieve a competitive cost of power in 2007, and we continue to be focused on that date and time and that objective.
And as I mentioned in response to an earlier question, there are several ways you get to that objective. One big and important way is by reducing the debt, no question about it. But there are other things that we do within the business to reduce our total cost and to achieve that competitive cost of power. I think I told the committee last year when we met it was unlikely that we would achieve that one-half reduction in debt by 2007.
That is still true because of some of the substitutions of strategies that we have made. Just as I mentioned in response to an earlier question, one substitution being taking some of the money that might have been earmarked for debt reduction and using it for new generation, taking some money that might have been earmarked for debt reduction and using it for additional pollution control activities. So there are a lot of changing strategies involved in that.
Mr. BAKER. If I may, I can't cite the source. I just have, again, a comment from GAO that reads to this effect: ''TVA does not now expect to reduce debt by one-half until fiscal year 2009, about two years after the plan's original target date.'' I can follow up to give the source of that at a later time.
My concern goes beyond the extension of the date to the basis on which the original debt reduction estimates were actually constructed. And you by your immediate remarks, have basically referred to that in that the original construction did not necessarily reflect capital outlays that might be required for environmental compliance reasons or for additional power generation capacity with the hope that that leads to sufficient revenue streams to offset the capital outlay.
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If we take those two factors into consideration, frankly, the 2009 date does not, in all honesty, appear to be a likely one, unless we don't comply with environmental mandates, unless we don't create new capacity of generation.
Mr. SMITH. Well, I think that is mathematically true, and that was the point of the GAO report is that it moves out to 2009 if you factor in additional expenditures for new capacity and for environmental compliance. And it is true, as we pointed out on the plan specifically, these were not in the original 10-year business plan. The intent was that we would buy power, to the extent we needed it, in the external market. That has proved to be an unreliable strategy for the people of the Tennessee Valley and an unreliable source for us to depend on in meeting our objectives of meeting the needs of the Valley.
So we have made expenditures for new generation, we have made expenditures for pollution control, both of which were the issues referred to by the GAO, and these will indeed preclude us from meeting that debt by one-half in the year 2007. That is absolutely true.
Mr. BAKER. My other point is that, with the identification of the funding concerns, the fact that the refinance has now occurred, that necessarily won't lead to a planned reduction, achievement of the debt reduction that was initially envisioned.
You have been, in explaining the position of the Authority and their management positions, indicating that we may, in fact, look for additional revenue sources, we may look to some cost efficiencies unidentified. It leads to this sort of obvious question: In looking at the financials for the last four years, typically, debt reductions have been in the $300 million range. You did, in 1998, have a $695 million payment. I just averaged them over the four years. It comes out to a $413 million debt reduction load. You are now projecting, in 2001–2002, a significant enhancement in debt reduction of about $758 million. If there is no further refinance mechanism available, if we are not planning today for new power generation capacity, which I assume would have to be somewhere close to being on somebody's desk with a plan at least to have it ready to produce income in 2001, what is the source of this enhanced debt reduction that appears to be outside our current ability to make? Where is that coming from and how are we getting to that?
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Mr. SMITH. Well, there are several things happening, if you are looking at the 2001 time frame. Number one, our expectation, of course, is that the business will grow. It has for several years.
Mr. BAKER. Excuse me. On that point, it would have to be at a rather rapid rate, as opposed to historical norms; is that not the case?
Mr. SMITH. I don't know your definition of ''rapid rate.'' It would conceivably be at a 4-percent rate, which is what our growth has been for the past ten years, and our growth is substantially more rapid than the national average. There are other things besides just growth in the system. We are not projecting currently to have in 2001 the level of expenditures for new generating capacity that we have this year and next.
We are also achieving other efficiencies. You mentioned what some of these might be. TVA is continuing to improve not only the productivity of the existing plants, but the productivity of its workforce as well. We have now 13,300 employees. I think at the beginning of the planning period we had closer to 14,000. And, frankly, if you look back seven years or so, we had 25,000. So we are continuing to implement, realize and gain the benefits of improved productivity of both plant and employees. There are just lots of things that go into the equation of the projections for 2001.
Mr. BAKER. Thank you, Mr. Smith.
Mr. Chairman, I know I have exhausted my time, and probably Mr. Smith as well, but I would just make the point for the record I would like to follow up in writing to the gentleman. In all deference, I don't think he was able to answer my question sufficiently, and I don't mean this in any derogatory manner. I just want to understand this a little better than apparently I am understanding it at the moment.
Thank you.
Mr. SMITH. I would be happy to.
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Mr. BOEHLERT. Mr. Baker, Mr. Clement has asked for another opportunity to question. And I would be glad to get back to you after him, if you would like.
Mr. Clement?
Mr. CLEMENT. Mr. Smith, I know Mr. Baker is my friend and my colleague over here, but we don't necessarily always agree on every issue.
Mr. BAKER. I can't remember when.
[Laughter.]
Mr. CLEMENT. He has introduced some legislation that could have a major impact on TVA. And I would like for you to comment on how his legislation would affect TVA.
Mr. SMITH. Well, I would be happy to. There are, of course, several aspects to your legislation. I think that it was generally our view that the objective of the legislation, which might have been to protect the Federal taxpayer from exposure to TVA, would be unlikely to occur. In fact, in some instances, we felt like it might actually jeopardize further your exposure to TVA as it jeopardized TVA's financial strength. Specifically, some of the measures that might have had the effect of creating investor uncertainty in TVA would tend to undermine their ability or their willingness to buy TVA securities.
As you are both well aware, TVA is now fully supported by the ratepayers or public investors. There is, as Dr. Jackson mentioned, no Federal monies coming into TVA for appropriated or nonappropriated programs. So we are very much dependent on the public market and the public confidence, and I think we have worked hard to earn that confidence.
Some of the features that might be imposed, additional taxes on TVA, seemed punitive to the Tennessee Valley ratepayers, but did not seem to create a commensurate level of comfort for any other taxpayer or any other constituency, except, perhaps, some of our competitors. So we did feel like it was a strategy that created substantial risk for TVA, substantial financial risk.
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I don't know what more to say than that.
Mr. CLEMENT. Dr. Jackson, do you want to add to that?
Ms. JACKSON. No.
Mr. CLEMENT. OK.
But the fact is, Mr. Smith, we at TVA, we, the ratepayers of TVA, are having to pay some additional costs that other parts of the country are not having to pay today when it comes to flood control and navigation that is provided for by the Corps of Engineers. But in the Tennessee Valley area, we have been zeroed out when it comes to appropriated Federal dollars for those specific purposes.
Mr. SMITH. Well, that is absolutely right, Mr. Congressman. I mean, we talk a lot about the money that TVA saved by refinancing the indebtedness that we had to the Federal Financing Bank, and as previously mentioned, it was something in excess of $100 million. But as you are all perfectly well aware, we also assumed additional funding responsibilities for previously appropriated programs that pretty well accounted for that savings.
And TVA is unique in performing some of these responsibilities that are performed by other agencies in other parts of the country. Now, while we do that, and I think we do it well, it is part of I think the ultimate dividend or benefit that the American taxpayer and you all get from your ownership of TVA.
Mr. CLEMENT. And it is also a fact, too, isn't it that in some legislation that has been proposed whereby private investor-owned utilities could sell power within the Tennessee Valley area, but we in the Tennessee Valley area could not sell power outside of our borders to other utilities.
Mr. SMITH. There have been suggestions of that kind, and I think that if that kind of legislation were proposed in that manner, it would undermine the financial strength and future of TVA. You can't take any enterprise in America and say, you know, ''This is your defined territory, everyone can compete against you. But you have no authority to defend yourself or to go elsewhere to replace that capacity.''
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So I think some other legislation is far more balanced in terms of giving TVA the opportunity to go outside its territory, on a wholesale basis, and make up those losses.
Mr. CLEMENT. And we ratepayers in the Tennessee Valley area we just wanted to be treated fairly. If the fence is going to come down, we just feel like we ought to have a right to sell power outside the Valley area just like those utilities or other companies have the right to sell power inside the Valley area.
Mr. SMITH. That is very much the nature of competition, Mr. Congressman.
Mr. CLEMENT. Thank you.
Ms. JACKSON. And if I could add to that, the point of fact is that is not a punitive action against TVA. It is an action against the consumers in one portion of the country. I mean, this isn't an issue that TVA will be hurt as much as the people who turn their lights on and off when they get home from work.
Mr. BOEHLERT. Thank you very much.
Mr. Baker, for the final round.
Mr. BAKER. Thank you. And I commend my good friend. We really do just have a difference of opinion. And let me, perhaps, by way of explanation, without regard to TVA in another congressional responsibility, a subcommittee I have interest in has oversight over Government-sponsored enterprises from Fannie Mae, Freddie Mac, Sallie Mae, Freddie Mac, all of them.
And although not clinically defined as a Government-sponsored enterprise, the Federal authority granting powers and responsibilities to the Tennessee Valley Authority and operational constraints looks very much like a traditional Government-sponsored enterprise.
And my reasons for asking unpopular questions at this moment is I feel that in the current environment, any business, whether it is a bank or a power generation operation, should find itself extraordinarily profitable because I hate to announce it, but it don't get any better than this. People are building and buying homes at record rates, finance rates are low, demand for product is high. These are the days in which we ought to be preparing for when that interest rate uptick occurs, home loan demand flattens and new consumers aren't crying to be hooked up to the TVA.
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More importantly, as technology and deregulation does become a reality, the assurance that you can hang onto current market share with a fixed operating cost, without an ability to spread the product over broader and broader market areas is not a circumstance that's too different from Fannie Mae or Freddie Mac.
The point being that I recognize the value of what the Authority does in the way of providing a meaningful service, rural electrification, flood control and other matters. But if we don't see some significant restructure in the business plan rather quickly, current estimates that I have been able to get, and I have been really trying to dig through this, is that, without enhanced revenue stream, significant new debt restructuring, we are looking at a payoff period well in excess of 20 years, and that would presuppose no significant environmental compliance expenditures, no capital outlays of great consequence and that you don't lose any customers to competition.
Now, I think over a 20-year clock, that is a pretty unrealistic expectation of what is likely to happen. And at the ultimate end of this process, I am not after turning out the lights on a consumer in Tennessee, I'm for making sure we don't turn out the lights on the taxpayer who gets stuck with a public utility that can't function in a competitive environment. The net position is we have to find a way to deal with the 26 billion dollars' worth of debt based on some presumptions that are not now, as I understand it, in the current 10-year plan.
Other than the restructuring of the Treasury debt, what other actions could you point to that make major potential changes in either revenue or cost savings? I know you have an extraordinary number of employees. We are not suggesting today, are we, that we have significant employee layoffs in light of your current market responsibilities?
Mr. SMITH. No, sir, we are not. In fact, TVA has not had a layoff in some number of years. The demographics of our workforce are such that we have a great number of people leaving and, indeed, our challenge, if you want to talk about what our challenges are that we worry about at night, is how we will bring sufficient new talent into the organization to replace the people that are leaving.
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Let me respond to one thing that you mentioned because I do know that part of your familiarity with TVA as a debt issue or comes from your work with other GSEs, other Government-sponsored enterprises, and you said we are oftentimes associated with them, and that is true. We are all called agency issuers of debt.
There is one, however, profound difference between us and all of them, and that is you own us, and you don't own them. And it is that very difference, I think, that accounts for things like why we don't pay taxes. I mean, you own the whole net income, you own the whole asset base. So you own all of TVA. It is the reason why you have more oversight on us than you do others; it is the reason why we do things for the Federal Government, like the nonpower programs, and pay for them out of our revenues. So there are fundamental, profound differences in mission even.
The other agencies, of course, wake up each day trying to figure out how to improve the plight of their shareholders, how to make more money. TVA is explicitly not marching to that drum beat. We march to the drum beat of how can we deliver power at the lowest possible cost. So all of these differences, I would urge you not to, in a sense, lump us in with our fellow agency groups, known as the Government-sponsored enterprises.
We do have a strategy, I would emphasize, to make sure that we don't lose customers in the future. You are absolutely right. That is critical to our success and to our survival, and that is what the 10-year plan was all about. It was to make sure that we had a competitive cost of power. Because in our judgment, in the future, only two things are going to promote success of a company, and that is competitive cost and a reliable product, and those are the two drivers that keep us going and focus our attentions. They were the purpose for the 10-year plan.
Mr. BAKER. Thank you. I just would point out that it is almost correct that other GSEs we don't own. The GSEs own their profit. The United States taxpayer owns their debt. So if they lose money, we are responsibilities; if they make money, they keep it. With regard to the Tennessee Valley Authority, if you were to be profitable, it would purportedly be spent on mission compliance which would benefit taxpayers.
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My concern is that, like the GSEs, we do also own your debt. And I don't want to constrain you. I want you to be creative and efficient. I just have not yet seen, nor identified by you, a cost-containment plan relating to capital expenditure or employees, an analysis of the capital outlay plan that assures you of an enhanced revenue stream far in excess of the cost of the capital outlay, nor any other financial restructure plan that can assure the committee that you will be paying this debt off in less than 20/25 years.
And in that scope of exposure in the market, there are too many unpredictable events which can occur which could dramatically affect your financial structure. And so, therefore, my concern is that some plan that will shield taxes from this exposure, and that really is all it is about.
Thank you very much.
Mr. SMITH. I wonder if I might have just a moment to respond to something.
Mr. BAKER. Sure. Sure.
Mr. SMITH. Mr. Congressman, you said that you own our debt, and usually we try to be as articulate as we can with investors and tell them that this debt is explicitly not guaranteed by the Federal Government. I know that was a feature of the legislation that you introduced. You wanted it, if you will, in bold-face type. We do put it in bold-face type. Every offering circular when we issue debt, we make sure that investors know explicitly that the debt is not guaranteed by the U.S. Government, neither interest nor principal. We do everything we can to get that message out, as do the rating agencies. So I would like to think that you don't own the debt. In fact, the party standing between you and TVA meeting that debt, frankly, are the ratepayers that Congressman Clement is talking about.
TVA is required in the TVA Act or the TVA board is required to raise rates sufficient to meet debt service. So if TVA, the enterprise, can't meet the debt, the board is required to impose that burden on the ratepayers of the Tennessee Valley, and that is why we are extremely sensitive about their exposure.
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You, if you will, stand third in line.
Mr. BAKER. I recognize the conditional nature of the liability. The same is true for the other GSEs, and I want to compliment you, I think, in looking at the history of the performance, at least now, whether we want to argue about whether there is a subsidy or not, we will forget that, but the current constraints, you are at least now in a position where revenues are matching outgoes, plus a little, and you will look better today than you have looked in a long time. I guess the good news is I wasn't around a few years ago. I would have really been upset. But I think we are making progress. My concern is that we don't make it timely enough to avoid a difficult circumstance. And I appreciate your forthright answers.
Mr. BOEHLERT. Closing on a positive note. With that, this hearing is adjourned. Thank you very much.
[Whereupon, at 3:57 p.m., the subcommittee was adjourned.]
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